The global economy has begun to improve, but the recovery will be weak, according to the latest Economic Outlook by the Organisation for Economic Cooperation and Development (OECD).

The Economic Outlook projects a moderation of global GDP growth from 3.3% in 2022 to 2.7% in 2023, followed by a pickup to 2.9% in 2024.

“Lower energy prices are easing the strain on household budgets, business and consumer sentiment are recovering — albeit from low levels — and the re-opening of China has provided a boost to global activity,” the OECD stated.

Headline inflation in the OECD countries is projected to decline from 9.4% in 2022 to 6.6% in 2023 and 4.3% in 2024. The decline in inflation is due to tighter monetary policy taking effect, lower energy and food prices and reduced supply bottlenecks.

In the euro area, declining headline inflation will help to boost real incomes and contribute to a pickup in GDP growth from 0.9% in 2023 to 1.5% in 2024. China is expected to see strong increases in GDP growth in 2023 (5.4%) and 2024 (5.1%) due to the lifting  of the government’s zero-Covid policy.

GDP growth in the US is projected to be 1.6% in 2023 before slowing to 1.0% in 2024 in response to tight monetary and financial conditions.

Across OECD countries, real GDP growth is expected to be highest in India for 2023 at 6%, while on the other hand GDP growth is expected to decline in Argentina (by 1.6%) and Russia (by 1.5%).

India is expected to lead the way in terms of real GDP growth in 2024 as well with forecast growth of 7%, followed by China at 5.1%. Meanwhile, Russia is expected to be the only country to show a decline (0.4%).

“This projected recovery, while almost unchanged from our interim projections in March, maintains the slightly more optimistic outlook that had been predicted and which we are now seeing materialise,” OECD Secretary-General Mathias Cormann said.

“Policy makers must get inflation durably down to target and unwind broad fiscal support by better targeting fiscal measures,” Cormann said. “While continuing to respond to the immediate economic challenges, it remains important to prioritise structural reforms to boost productivity, including by promoting competition, reviving investment, increasing female workforce participation and alleviating supply constraints while securing the green and digital transformations of our economies.”