The OECD’s (Organisation for Economic Co-operation and Development) latest Interim Economic Outlook projects global GDP growth of 2.9% in 2024 and a slight improvement to 3.0% in 2025, broadly in line with the previous OECD projections from November 2023.

Asia is expected to continue to account for the bulk of global growth in 2024-25, as it did in 2023. In 2024, India tops growth with an expected growth rate of 6.2%, followed by Indonesia (5.1%) and China (4.7%). In 2025, growth is also projected to be led by India (6.5%), Indonesia (5.2%) and China (4.2%).

China’s growth rates signal a lower performance than in any of the 25 years before Covid-19, reflecting weak consumer demand and structural strains in property markets.

In the euro area, GDP growth is expected at 0.6% in 2024 and 1.3% in 2025, with activity remaining subdued in the near term, amid tight credit conditions, before picking up as real incomes strengthen.

Japan is projected to grow by 1.0% in both 2024 and 2025, mainly driven by private consumption and business investment. 

Growth in the US is projected at 2.1% in 2024 and 1.7% in 2025, helped by consumers continuing to spend savings built up during the Covid-19 pandemic and easier financial conditions.

The Outlook also highlights a range of challenges. Geopolitical tensions remain a key source of uncertainty and have risen further as a result of the evolving conflict in the Middle East. Threats to shipping in the Red Sea have increased shipping costs and lengthened supplier delivery times. In case of an escalation, these factors could result in renewed price pressures in goods sectors and put the anticipated cyclical pick-up at risk.

OECD estimates suggest that a doubling in shipping costs, if persistent, would add 0.4% to consumer price inflation in the OECD after about a year.

OECD Secretary-General Mathias Cormann said, “The global economy has shown real resilience amid the high inflation of the past two years and the necessary monetary policy tightening. Growth has held up, and we expect inflation to be back to central bank targets by the end of 2025 in most G20 economies. Monetary policy needs to remain prudent, though central banks could start to lower interest rates this year, provided that inflation continues to ease.”

“A longer-term approach is needed to strengthen the foundations for a more sustainable and prosperous economy,” OECD Chief Economist Clare Lombardelli said. “Policy makers need to take action today to ensure sound public finances whilst maintaining and promoting measures to improve productivity and equip economies for the future.”