Signs of hope are emerging for global growth in 2023, but several risks remain, finds the OECD’s latest economic outlook.
The OECD is projecting 2.6% real GDP growth worldwide in 2023, up from 2.2% in its previous forecast but below 2022’s 3.2% figure. The organization expects 2.9% real GDP growth in 2024.
The upward revision was thanks in part to increased consumer confidence and the recent decline in energy and food prices, as well as an earlier-than-expected reopening in China, which the OECD expects will reduce supply chain pressures and boost international tourism.
The OECD raised its 2023 China forecast accordingly to 5.3% from 4.7%.
Canada, however, is expected to hit just 1.1% GDP growth this year, down from the 1.5% projected previously, and 1.4% in 2024. Those projections are also down from the ones the OECD released earlier this month.
“The outlook today is slightly more optimistic than our previous forecasts, though the global economy remains fragile,” OECD Secretary-General Mathias Cormann said in a release.
That fragility comes from risks such as the ongoing war in Ukraine, persistent inflation of service costs and financial market turbulence.
As a result, “more targeted fiscal support and structural reforms to revive productivity growth will be key to optimizing the recovery and long-term growth prospects,” Cormann said.
As well, the OECD recommended that monetary policy stay the course “until there are clear signs that underlying inflationary pressures are lowered durably,” adding that high policy rates will probably need to be maintained “well into 2024.”
The OECD predicted that inflation for the G20 will be 5.9% in 2023, down from 6.6% in its last forecast and 8.1% in 2022.