Global economy likely to grow 3% in 2023, 2.7% in 2024: OECD

The global economic growth can fall from 3.3% in 2022 to 3% this year and then slow down to 2.7% in 2024, the OECD said in its September interim edition of the OECD Economic Outlook.

The 2023 figure is 0.3 percentage points higher than that in the June edition, while the 2024 figure is 0.2 percentage points lower. The OECD attributed the figures to many economies being held back by the macroeconomic policy tightening needed to rein in inflation.

The growth in early 2023 exceeded the expectation, thanks to lower energy prices and the reopening of China. However, the global growth is expected to moderate, as the impact of tighter monetary policy is becoming increasingly visible, business and consumer confidence have turned down, and the rebound in China has faded, the OECD noted.

"A key priority is to revive global trade, an important source of long-term prosperity for both advanced and emerging-market economies. Concerns about economic security should not prevent advantage being taken of opportunities to lower trade barriers, especially in service sectors," it said.

The G20 group's overall growth is anticipated at 3.1% in 2023, above the global figure. The highest figures are India with 6.3%, China with 5.1%, Indonesia with 4.9%; while the lowest ones are Argentina with negative 2%, Germany with negative 0.2%, the UK with 0.3%, South Africa with 0.6%, and Russia with 0.8%.

In 2024, India, Indonesia, and China are expected to continue leading the pack with 6%, 5.2%, and 4.6%, respectively.

The OECD highlighted that among G20 economies, China is distinctive as its has its own cyclical and structural stresses. While most large emerging-market economies have followed the major advanced economies in raising interest rates, in part to avoid unwanted depreciation of their currencies against the US dollar, China has been easing monetary policy to address the slowdown in domestic demand growth.

Growth in China is seen as slowing through this year and next after an initial rebound in early 2023 from reopening.

Weak consumer confidence and significant ongoing problems in the property market, with low sales generating liquidity shortages and default risks for highly-leveraged real estate developers, are key sources of concern, the OECD added.