The Organisation for Economic Co-operation and Development (OECD) offers most recent forecast for the global economy in its February report on Interim Economic Forecasts. Over the next two years it expects:
- Global GDP growth will slow, falling from 3.1% in 2023, to 2.9% in 2024, before modestly recover to 3.0% in 2025. Global growth in 2023 was more resilient than expectations, with robust US and emerging markets growth countered by a decline in most European countries.
- GDP growth in Australia is projected to slow to 1.4% in 2024 and slightly rebound to 2.1% in 2025, as tightening monetary policy continue to take effect. However, Australia is expected to perform more strongly than peers in Europe, given its favourable terms of trade.
- Headline inflation in the G20 is expected to increase from 6.3% to 6.6% in 2024, and ease back towards 3.8% across 2025. However, core inflation – a measure which excludes volatile food and energy prices - will ease to 2.5% during 2024 and keep falling to 2.1% in 2025. Although labour market conditions have improved, unit labour cost growth is above medium-term inflation targets and it is too early to determine that the underlying price pressures are under controlled.
- Australia’s headline inflation is projected to fall from 5.7% to 3.5% in 2024, and to 2.8% in 2025. This is a faster path of normalisation than in other G20 advanced economies and reflects lower Australian exposure to the effects of high commodity prices.
- High geopolitical tensions could adversely affect the activity and inflation in the near future especially for the energy market if the conflict in the Middle East hasn’t resolved. The lingering consequences of earlier policy rate rises could potentially slow the growth.
Read the OECD’s Economic Outlook Interim Report for February 2024 here.
