According to the OECD, the global economy is expected to grow by 2.6 percent in 2023

Russia’s war against Ukraine is clearly clouding the outlook for the global economy. But the industrialized country organization OECD also sees positive developments.

The Organization of the Industrialized Countries (OECD) is cautiously watching the development of the world economy. After growing 3.2 percent last year, economic output is likely to grow only 2.6 percent this year and 2.9 percent next year. The OECD announced in Paris on Friday that this is below the long-term growth trend. But consumer and business confidence is slowly improving, inflationary pressures are easing and China is reopening.

According to the OECD, inflation in most G20 countries is likely to decline gradually over the course of the year, from 8.1 percent last year to 5.9 percent this year and 4.5 percent next year. Tighter monetary policy is starting to take effect and energy prices are falling after the mild winter in Europe.

For the euro area, the OECD expects growth of 0.8 percent this year and 1.5 percent in 2024, once the impact of high energy prices fades.

For Germany alone, the OECD expects inflation to fall from 8.7 to 6.7 percent this year and to 3.1 percent next year. Gross domestic product will probably increase by 0.3 percent, next year the German economy is expected to grow by 1.7 percent.

OECD warns of risks

However, the OECD also warned that the economic recovery is only just getting under way. There are still clear risks of a recession. Uncertainty about the course of the Russian offensive war against Ukraine is central.

It is difficult to estimate what additional effect the changed monetary policy will have. Further risks could arise in the financial and banking sector, which could make it difficult for some countries to service their debts. In addition, pressure on the global energy markets could increase again and lead to higher prices for consumers. Monetary policy should remain restrictive until there are clear signs of lower inflation.

In addition, the OECD warned that tax measures should be handled with great care and targeted at those most in need. This is the only way to absorb the high prices for food and energy. (saw/sda/awp/dpa)