OECD predicts weaker growth and continued inflation for 2024

Growth in the global economy is expected to remain "sub-par" next year, according to the Organization for Economic Cooperation and Development (OECD) which cut its forecast for 2024 from 2.9% to 2.7% on Tuesday.

It also predicted that inflation would remain above the goals set by central banks around the world that have gone on a campaign of interest rate hikes in an attempt to tame rising costs.

At the same time, the OECD revised its global growth expectations for 2023 up to 3.0%, from the previous forecast of 2.7%.

What did the OECD say?

"After a stronger-than-expected start to 2023, helped by lower energy prices and the reopening of China, global growth is expected to moderate," the OECD said.

"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 European Central Bank raised interest rates to a record high last week as it tries to bring inflation down to its target of just 2%. According to the European Commission, inflation in the Eurozone was at 5.3% in August.

"Inflation is projected to moderate gradually over 2023 and 2024 but to remain above central bank objectives in most economies," the OECD added.

"Even if policy rates are not raised further, the effects of past rises will continue to work their way through economies for some time."

Not all countries faring the same

Fears over a "sharper-than-expected slowdown in China" were part of the reason for the OECD's increased pessimism about the global economy. It predicted that China's growth would fall from 5.1% this year to 4.6% next year.

It also forecast reduced growth in the world's largest economy — the US — slowing from 2.2% in 2023 to 1.3% in 2024.

The Eurozone was forecast to see increased growth next year, up from 0.6% to 1.1%, but with both figures down from earlier forecasts as the German economy, the biggest in the EU, struggles.

While all rich countries have been struggling with inflation, the UK is expected to have the highest overall rate of inflation for 2023: 7.2% compared to the 6.9% that the OECD had previously predicted.

Germany and France were forecast to have inflation rates of 6.1% and 5.8% respectively for 2023, with both figures down from the previous forecast.