The OECD has improved its growth outlook for this year, but warns of the fragility of the recovery

The OECD has improved its growth outlook for this year, but warns of the fragility of the recovery

OECD improves growth outlook for this year, but warns of fragile recovery ;

Illustration photo – A truck brings a container of Chinese goods in the northern Chinese port of Tianjin – illustration picture

Paris – The Organization for Economic Co-operation and Development (OECD) has improved growth outlook for the world's major economies for this year at 2.6 percent, while in November it counted on growth of 2.2 percent. She justified this by the drop in food and energy prices and the easing of measures against the spread of covid-19 in China. But she warned of the fragility of the economic recovery due to high interest rates. This follows from the long-term economic outlook that the organization published today.

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Last year, the global economy grew by 3.2 percent. Economic growth should accelerate to 2.9 percent next year, thanks to the fading of the impact of high energy prices on household incomes, the OECD said. In November, it estimated economic growth for next year at 2.7 percent.

The OECD also predicts that inflation in the Group of 20 major economies will fall from 8.1 last year to 5.9 percent this year and further decrease to 4.5 percent in 2024. This will still be the case despite interest rate hikes by many central banks significantly above their long-term inflation targets.

According to the OECD, the full impact of higher interest rates is difficult to measure. At the same time, the organization warned that increased tension between borrowers could turn into losses for some banks. As an example, the OECD cited the recent collapse of Silicon Valley Bank (SVB) in the United States.

The OECD expects central bank interest rates to peak at 5.25 to 5.5 percent in the United States and 4, 25 percent in the Eurozone and Britain. According to her, the drop in inflation could allow for a moderate relaxation of the monetary policy of the central banks next year.

The OECD also improved the growth outlook for the eurozone thanks to the drop in energy prices. It expects gross domestic product (GDP) growth of 0.8 percent for the twenty-member bloc this year and 1.5 percent next year. So far, it has forecast growth of 0.5 and 1.4 percent.

The United States economy will grow by 1.5 percent this year and 0.9 percent next year, according to the OECD. The Chinese economy is estimated to add 5.3 percent this year and 4.9 percent next year.