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Global growth is stabilizing as inflation eases and central banks begin cutting interest rates, according to the OECD. The 2024 global growth forecast has been raised to 3.2%, with consumer spending rising as inflation falls. The U.S. economy is expected to slow, but rate cuts by the Federal Reserve could ease this. In Europe, growth is set to improve with lowered ECB rates, while the UK and eurozone see stronger prospects. China, however, faces slowing growth due to weak demand and a real estate slump. Overall, inflation easing and rate cuts are crucial drivers of economic recovery.

Key Highlights

* OECD raises global growth forecast to 3.2% for 2024.

* Central bank rate cuts to boost spending in coming years.

* U.S. growth expected to slow while inflation cools.

* Chinese economy faces slowing demand and real estate slump.

* Eurozone and UK forecasted for stronger growth in 2024.

Global growth is stabilizing as the drag from central bank rate hikes begins to fade, and households benefit from falling inflation, according to the OECD. The organization raised its 2024 global growth forecast to 3.2%, up from 3.1%, while maintaining its 2025 projection at 3.2%. The report highlights that easing inflation is boosting consumer spending, especially as the impact of previous interest rate hikes diminishes. Should the current decline in oil prices persist, global inflation could fall by 0.5 percentage points, further aiding growth.

The U.S. economy is projected to slow from 2.6% growth in 2024 to 1.6% in 2025. However, interest rate cuts by the Federal Reserve, which are expected to bring rates down to 3.5% by 2025, could cushion this deceleration. The European Central Bank is also forecast to lower its rates, which would contribute to a recovery in the eurozone, where growth is predicted to jump from 0.7% in 2023 to 1.3% in 2024, thanks to improving household incomes.

Elsewhere, the Chinese economy is expected to slow to 4.5% in 2025 as government stimulus measures are offset by weak consumer demand and challenges in the real estate sector. The UK economy is projected to expand by 1.1% in 2024 and 1.2% in 2025, driven by high wage growth, marking a positive shift from earlier predictions.

Finally

Global growth is on the path to stabilization, with easing inflation and rate cuts playing pivotal roles in fostering recovery across major economies in the coming years.

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