The world economy will slow next year because of inflation, rates and war, OECD says
The global economy, which has proved surprisingly resilient this year, is expected to falter next year under the strain of wars, still-elevated inflation and continued high interest rates
WASHINGTON — The global economy, which has proved surprisingly resilient this year, is expected to falter next year under the strain of wars, still-elevated inflation and continued high interest rates.
The Paris-based Organization for Economic Cooperation and Development estimated Wednesday that international growth would slow to 2.7% in 2024 from an expected 2.9% pace this year. That would amount to the slowest calendar-year growth since the pandemic year of 2020.
Despite the gloomier outlook, the organization is “projecting that recessions will be avoided almost everywhere,” OECD Secretary-General Mathias Cormann said at a news conference.
However, he added, there are risks that inflation will stay persistently high and that the Israel-Hamas conflict and Russia’s war in Ukraine could affect prices for commodities, such as oil or grain.
A key factor in the slowdown is that the OECD expects the world's two biggest economies, the United States and China, to decelerate next year. The U.S. economy is forecast to expand just 1.5% in 2024, from 2.4% in 2023, as the Federal Reserve’s interest rate increases — 11 of them since March 2022 — continue to restrain growth. The Fed's higher rates have made borrowing far more expensive for consumers and businesses and, in the process, have helped slow inflation from its four-decade peak in 2022. The OECD foresees U.S. inflation dropping from 3.9% this year to 2.8% in 2024 and 2.2% in 2025, just above the Fed’s 2% target level.
For now, the American economy looks strong: The Commerce Department
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