The OECD raised its global growth forecasts on Friday on the back of slowing inflation and China’s reopening, but the recovery remains fragile amid major difficulties for some banks. The international organization now forecasts global growth of 2.6% for 2023 and 2.9% for 2024, according to its provisional economic outlook.
It publishes these new figures in the midst of the banking crisis, considering that interest rate rises “could continue to uncover financial vulnerabilities linked to high indebtedness and the excessive valuation of certain assets”, as recently revealed by the closure or rescue of several banks americans.
“Signs of the impact of tighter monetary policies have begun to appear in parts of the banking sector, especially regional banks in the United States,” the Organization for Economic Co-operation and Development (OECD) said in its report.
“Gradual improvement”
Specifically, “sudden changes in market interest rates and the current market value of bond portfolios could also further highlight the duration risks inherent in the business models of financial institutions, as demonstrated by the Silicon bankruptcy.” Valley Bank in March in the United States”. The difficulties encountered this week by Credit Suisse, a much larger bank whose failure would pose a systemic risk to the global economy, were not taken into account in the report.
Another economic Achilles heel, prices in the real estate market, which have begun to fall in many countries, with possible cascading effects in other sectors. But despite these risks, the OECD forecasts a “gradual improvement” in the general economic situation throughout 2023 and 2024, with some easing of inflation. Global growth should also benefit from “the full reopening of China” whose activity should pick up in 2023.
In the G20 countries, which account for around 85% of the world’s gross domestic product (GDP), the price rise should decrease, from 8.1% in 2022 to 4.5% in 2024, the organization predicts. Compared with its latest economic outlook in November, global growth increased 0.4 percentage points this year and 0.2 points next. Germany would now emerge from a recession this year with growth of 0.3%, compared to 0.7% in France (+0.1 point compared to November). US growth is expected to reach 1.5%, versus 0.5% previously forecast.
Source: BFM TV
