The Organization for Economic Co-operation and Development raised its forecast for global growth on Friday as inflation slows and China reopens its borders after abandoning its policy zero-Covid, but the recovery remains fragile against the background of the considerable difficulties faced by some banks.
The international organization currently expects global growth of 2.6% for the year 2023 and 2.9% for the year 2024, according to its interim economic forecasts.
And the Organization for Economic Co-operation and Development released these new data on Friday amid a banking crisis, believing that rising interest rates “may continue to reveal financial vulnerabilities associated with high debt and overestimation of some asset”, as shown recently by the closure or bailout of many American banks.
The Organization for Economic Co-operation and Development indicated in a statement that “signs of the impact of monetary policy tightening are beginning to appear in some aspects of banking, especially in regional banks in the United States”.
“Sudden changes in market interest rates and the current market value of bond portfolios can also reveal long-term risks in the models of financial institutions, as evidenced by the US Silicon Valley crash in March,” he added.
The organization did not factor in the difficulties Credit Suisse faced this week in its report. The collapse of this bank poses a global threat to the global economy.
But despite the risks, the Organization for Economic Co-operation and Development expects a “gradual improvement” in the overall economic situation over the course of 2023 and 2024, with a slowdown in inflation.
Global growth is expected to benefit from “full reopening of China’s borders”, which is expected to resume in 2023.
Rising commodity prices prime it could decrease in the G20 countries, which account for about 85% of global GDP, from 8.1% in 2022 to 4.5% in 2024, according to the organization.
Compared to the latest November economic forecast, global growth increased by 0.4 percentage points per questyear and by 0.2 percentage points for next year.
Germany will now escape the recession of questyear with growth of 0.3% against 0.7% in France, while growth in the United States will be 1.5% against 0.5% expected in precedence.
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