/f/81332/1920x640/1a05a04a5b/economic-outlook-nov2023_hero1920x640.jpg)
Restoring growth
The global economy continues to confront the challenges of inflation and low growth prospects. GDP growth has been stronger than expected so far in 2023, but is now moderating on the back of tighter financial conditions, weak trade growth and lower business and consumer confidence. Risks to the near-term outlook remain tilted to the downside and include heightened geopolitical tensions, for example due to the evolving conflict following Hamas’ terrorist attacks on Israel; and a larger-than-expected impact of monetary policy tightening. On the upside, growth could also be stronger if households spend more of the excess savings accumulated during the pandemic.
Global growth will remain moderate
Global growth is projected to be 2.9% in 2023, and weaken to 2.7% in 2024. As inflation abates further and real incomes strengthen, the world economy is projected to grow by 3% in 2025. Global growth remains highly dependent on fast-growing Asian economies.
/f/81332/364x137/ac7fb9c8bf/cta-download_download-images.png)
/f/81332/300x141/9b7a445183/cta-download_download-data.png)
/f/81332/435x136/2cb1f76b40/cta-download_en-read-analysis.png)
Inflation is expected to ease
In the absence of further large shocks to food and energy prices, projected headline inflation is expected to return to levels consistent with central bank targets in most major economies by the end of 2025. Annual OECD headline inflation is expected to fall gradually to 5.2% and 3.8% in 2024 and 2025 respectively, from 7.0% in 2023.
Fiscal policy needs to prevent unsustainable debt increases
Public debt to GDP ratios today stand at high levels in historical perspective and governments face mounting fiscal pressures, stemming from multiple sources, including ageing societies and the need to tackle climate change. Stylised mechanical projections show that in the absence of government action the level of public debt to GDP is set to continue to increase to high levels.
Trade growth is weak
Global trade growth has been surprisingly weak over the past year. This is worrying given the importance of trade for productivity and development. Merchandise trade volumes fell by 1.5% in the first half of the year, whilst services trade volumes are estimated to have risen by 6.4%, as the ongoing normalisation of travel in Asia helped to boost tourism. Weak trade is not an entirely new development. Since the recovery from the pandemic, trade has fallen relative to GDP, particularly merchandise trade.
What should governments do?
Country economic snapshots
Event resources
Key data
OECD Economic Outlook, Volume 2023 Issue 2
/f/81332/340x453/3351a5cf1f/economic-outlook-nov2023-cover7a5f73ce.jpg)
The global economy continues to confront the challenges of persistent inflation and subdued growth prospects. GDP growth has been stronger than expected so far in 2023, but is now moderating as the impact of tighter financial conditions, weak trade growth and lower business and consumer confidence is increasingly felt. The slowdown is projected to be mild, with continued disinflation, but a growing divergence across economies is expected to persist in the near term.
