US Expected to Drive Global GDP Growth

The Organization for Economic Co-operation and Development (OECD) has increased its global economic growth forecast for 2024, driven by strong performances in the United States.

The latest outlook reported the US economy is now expected to expand 2.6% in 2024, which is an increase from the 2.1% that was previously expected and faster than last year’s 2.5%.

As a result, the OECD forecasts a steady global GDP growth of 3.1% in 2024, which is the same percentage rate as 2023, followed by a slight increase to 3.2% in 2025.

The global economy is expected to continue growing at a modest pace because global activity has proven relatively resilient, inflation continues to decline and private sector confidence has improved.

Even though the outlook remains optimistic, the OECD has warned the impact of tight monetary conditions continues to be felt, particularly in housing and credit markets.

Therefore, the OECD has presented a series of policy recommendations, which highlight the need for a budgetary path that will address rising fiscal pressures and ensure a reduction in inflation.

Although interest rates could be lowered as inflation declines, it said monetary policy must remain sensible and restrictive for “some time to come”  to ensure that inflationary pressures are contained.

Mathis Cormann, secretary general of OECD, said:  “Monetary policy should remain prudent, with scope to lower policy interest rates as inflation declines, fiscal policy needs to address rising pressures to debt sustainability, and policy reforms should boost innovation, investment and opportunities in the labor market particularly for women, young people, and older workers.”