OECD Raises Global Economic Growth Forecast to 3.1% This Year... Recovery Trend

The Organisation for Economic Co-operation and Development (OECD) released its economic outlook report on the 2nd (local time), projecting the global economic growth rate for this year at 3.1%.

Initially, in the interim economic outlook released in February, it was forecasted at 2.9%, so this is an upward revision of 0.2 percentage points. The OECD stated, "Global economic activity is showing signs of recovery, inflation rates are falling faster than initially expected, and confidence in the private sector is also improving."

The global economic growth rate for next year is projected at 3.2%, which is 0.2 percentage points higher than the February report's forecast of 3.0%. The OECD expects the world economy to grow due to real income increases and the effects of policy interest rate cuts.

By country, the United States' growth rate forecast for this year is 2.6%, an upward revision of 0.5 percentage points compared to the previous report. However, due to high borrowing costs and a reduction in excess household savings that had driven the economy last year, demand within the U.S. is expected to slow down from mid-year.

South Korea is expected to grow by 2.6% this year and 2.2% next year. These forecasts have been revised upward by 0.4 percentage points for this year and 0.1 percentage points for next year compared to the previous report. The strong global semiconductor demand and easing monetary policy stance are expected to lead to a gradual recovery in domestic demand.

Japan's growth rate is projected at 0.5% this year and 1.1% next year, driven by real wage increases, accommodative monetary policy, and temporary tax cuts. China is expected to grow by 4.9% this year and 4.5% next year, supported by fiscal stimulus measures and exports.

The annual consumer price inflation rate for the Group of Twenty (G20) countries is expected to fall from 5.9% to 3.6% next year as cost pressures ease. Furthermore, inflation is predicted to return to target levels in most major countries by the end of next year.

South Korea's consumer price inflation rate is expected to remain around 3% in the short term due to rising energy and food prices, then decline to 2.6% by the end of this year and further down to the target rate of 2% next year.

Considering inflation and growth forecasts, the OECD stated that major advanced economies, excluding Japan, may begin cutting policy interest rates starting this year.

While risk factors are gradually easing, uncertainties remain. These include geopolitical risks from escalating conflicts in the Middle East, prolonged high inflation and high interest rates, potential asset market contraction if interest rate cuts are delayed, and uncertainties about the timing of China's economic recovery. The OECD recommended that countries prepare fiscal policies to manage inflation and respond to inflationary pressures, and pursue reforms for sustainable and inclusive growth.