OECD Economic Outlook

The global economy proved more resilient than expected in the first half of 2023, but the growth outlook remains weak. With monetary policy becoming increasingly visible and a weaker-than-expected recovery in China, global growth in 2024 is projected to be lower than in 2023. While headline inflation has been declining, core inflation remains persistent, driven by the services sector and still relatively tight labour markets. Risks continue to be tilted to the downside. Inflation could continue to prove more persistent than anticipated, with further disruptions to energy and food markets still possible. A sharper slowdown in China would drag on growth around the world even further. Public debt remains elevated in many countries.

2.7%

Projected global GDP growth for 2024

2.6%

Projected headline inflation across G20 advanced economies in 2024

2.8%

Projected core inflation across G20 advanced economies in 2024

Global growth is expected to remain weak

The world economy is expected to grow by 3.0% in 2023, before slowing down to 2.7% in 2024. A disproportionate share of global growth in 2023-24 is expected to continue to come from Asia, despite the weaker-than-expected recovery in China.

Headline inflation is coming down but core inflation remains persistent

Headline inflation has continued to come down in many countries, driven by the decline of food and energy prices in the first half of 2023. However, core inflation – inflation excluding the most volatile components, energy and food – hasn’t significantly slowed. It remains well above central banks’ targets. A key risk is that inflation could continue to prove more persistent than expected, which would mean interest rates need to tighten further or remain higher for longer.

Monetary policy is working its way through our economies

The tightening of monetary policy is working its way through economies. Alongside the rapid increase of policy rates, interest rates for new corporate loans and new mortgage loans have increased. While the rising borrowing costs are painful for households and firms, dampening households’ and firms’ demand through higher borrowing costs is a standard channel through which monetary policy normally takes effect.

What can governments do?

1. Monetary policy needs to remain restrictive

To confront inflation, monetary policy should remain restrictive until there are clear signs that underlying inflationary pressures are durably abating.

> Read more

2. Fiscal policy needs to prepare for future spending pressures

Governments need to design and implement credible medium-term fiscal plans that recognise and respond to mounting future spending needs related to addressing ageing populations, defence, the climate transition and growing debt burdens.

> Read more

3. Lowering trade restrictions would boost productivity and growth

Trade integration needs to continue. It is an important source of long-term prosperity for both advanced and emerging-market economies. Concerns about economic security should not prevent governments from taking advantage of opportunities to lower trade barriers, especially in service sectors.

> Read more

Event resources