World Economy Will Slow In 2024 Because Of Inflation, High Rates, War: OECD
by Abdul Aziz Mondal News 30 November 2023
The International economy, which surprisingly came out to be highly resilient this year, has been expected to falter next year due to the strain of wars, elevating inflation, and continuing high rates of interest.
The Organization for Economic Cooperation and Development based in Paris estimated on Wednesday that international growth is about to slow down to 2.7% in 2024, from where it stands at 2.9% this year.
This would amount to the slowest growth in the calendar since the drop happened in 2020 during the COVID-19 pandemic.
One of the main reasons is that the OECD is expecting the two biggest economies in the world, the United States and China, to deteriorate next year.
The US economy is projected to expand only by 1.5% in 2024, from 2.4% in 2023, as the interest rate of the Federal Reserve raised 11% from March 2020 and has been restraining growth since then.
The higher rates of the Federal Reserve have made borrowing a lot more expensive for businesses as well as the consumers, and in this process, have helped in slowing down inflation the four-decade it attained in 2022.
The OECD is expecting inflation in the United States to drop from 3.9 percent this year to 2.8 percent in 2024 and 2.2 percent in 2025, which is just above the expected 2 percent target level of the Federal Reserve.
“The Chinese economy, beset by a destructive real estate crisis, rising unemployment, and slowing exports, is expected to expand 4.7% in 2024, down from 5.2% this year. China’s consumption growth will likely remain subdued due to increased precautionary savings, gloomier prospects for employment creation, and heightened uncertainty,?” the OECD questioned.
Also probably contributing to this global slowdown are more than 20 countries that share the same euro currency.
They have been hurt by increasing interest rates and by a jump in the prices of energy that came up after Russia’s Ukraine invasion. The OECD is expecting the collective growth of the eurozone countries to amount to only 0.9 percent in the upcoming year, which is still considered an improvement from the 0.6 percent growth expected in 2023.
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