Global growth is in the process of stabilising as the drag from central bank rate hikes fades and falling inflation boosts households' incomes, the OECD said today, marginally raising its outlook for this year.
The world economy was projected to grow 3.2% both this and next year, the Organisation for Economic Cooperation and Development forecast, nudging up its 2024 forecast from 3.1% previously while leaving 2025 unchanged.
As the lagged impact of central bank tightening evaporates, interest rate cuts would boost spending going forward while consumer spending benefitted from lower inflation, the OECD said in an update of its latest economic outlook.
If a recent decline in oil prices persists, global headline inflation could be 0.5 percentage points lower than expected over the coming year, the Paris-based OECD said.
With inflation heading towards central bank targets, the OECD projected that the US Federal Reserve's main interest rate would ease to 3.5% by the end of 2025 from 4.75%-5% currently and European Central Bank would cut to 2.25% from 3.5% now.
US growth was expected to slow from 2.6% this year to 1.6% in 2025 though interest rate cuts would help cushion the slowdown, the OECD said, trimming its 2025 estimate from a forecast of 1.8% in May.
The Chinese economy, the world's second-biggest, was seen slowing from 4.9% in 2024 to 4.5% in 2025 as government stimulus spending is offset by flagging consumer demand and a real estate rut.
The euro zone would help make up for slower growth in the two biggest economies next year with the 20-nation bloc's growth forecast to nearly double from 0.7% growth this year to 1.3% as incomes grow faster than inflation.
Meanwhile, the OECD hiked its outlook for the UK economy amid high wage growth, projecting the UK economy expanding by 1.1% in 2024 and 1.2% in 2025, up from May forecasts for 0.4% this year and 1% next year.
OECD still sees '100% commitment' to finalise global tax pact
The Organisation for Economic Cooperation and Development (OECD) still sees total commitment from countries seeking to wrap up a global tax pact on highly profitable multinationals, its head of tax said, after months of delays and hesitation by some big countries.
Officials from nearly 130 countries and jurisdictions missed a mid-year deadline to finalise the terms of an international treaty that reallocates taxing rights across borders mainly on US big digital companies, leaving its future in limbo.
The pact, the first of a two-pillar cross-border corporate tax overhaul agreed in 2021, aims to replace unilateral digital services taxes with new rules for sharing taxing rights on companies such as Alphabet's Google, Amazon.com and Apple.
"There is 100% commitment among members to get it done," OECD tax director Manal Corwin told journalists.
"The sense of urgency is high and certainly getting something before the end of the year would be a top priority of mine," she added.
Washington has said that India, China and Australia remain hold-outs on US demands over alternative ways to calculate transfer pricing.
Meanwhile, countries have begun implementing the second pillar of the 2021 global tax deal, under which they agreed to set a 15% minimum corporate tax rate or apply a top-up levy for big multinational s booking profits in countries with lower rates.
As part of implementation of the second pillar, a first wave of 19 countries have signed or committed to sign a treaty that allows developing countries to tax some outbound intra-company payments that otherwise could be made with little or no tax, the OECD said.
