OECD Claims Inflation May Slash Global Economic Growth
The main risk to an otherwise upbeat global economic outlook is that the current inflation spike proves longer and rises further than currently expected, the OECD said on Wednesday, Leigh Thomas reported for Reuters.
Photo Insert: The OECD Headquarters
Global growth is set to hit 5.6% this year before moderating to 4.5% in 2022 and 3.2% in 2023, the Organization for Economic Cooperation and Development (OECD) said in its latest economic outlook.
That was little changed from a previous forecast of 5.7% for 2021, while the forecast for 2022 was unchanged. The OECD did not produce estimates for 2023 until now.
With the global economy rebounding strongly, companies are struggling to meet a post-pandemic snap-back in customer demand, causing inflation to shoot up worldwide as bottlenecks have emerged in global supply chains.
Like most policymakers, the OECD said that the spike was expected to be transitory and fade as demand and production returned to normal.
In the United States, the OECD forecast the world's biggest economy would grow 5.6% this year, 3.7% in 2022, and 2.4% in 2023, down from previous projections of 6.0% in 2021 and 3.9% in 2022.
The outlook for China was also less optimistic, with a growth forecast at 8.1% in 2021 and 5.1% in both 2022 and 2023 whereas previously the OECD had expected 8.5% in 2021 and 5.8% in 2022.
However, the outlook was slightly more upbeat for the eurozone than previously expected with growth expected at 5.2% in 2021, 4.3% in 2022, and 2.5% in 2023 compared with previous forecasts of 5.3% in 2021 and 4.6% 2022.