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OECD Says World Economy Looks to Dodge Stagflation Rut

The Organisation for Economic Co-operation and Development (OECD) stated that the outlook of the global economic system is improving.

OECD Says World Economy Looks to Dodge Stagflation Rut

According to the experts of the mentioned organization, economic growth is currently on a more stable trajectory. They also note that in many countries there is a decrease in inflation at a faster pace than the preliminary expectations for the dynamic of the corresponding indicator.

At the same time, the OECD, based in Paris, warns that armed conflicts in the Middle East or a longer rise in the cost of goods and services still continue to be sensitive factors that could potentially bring down economic stability. The organization also notes that the risks are becoming better balanced.

The OECD predicts that the global economy will show growth of 3.1% in the current year. It is worth noting that in February, this organization expected the mentioned indicator to rise by 2.9% in 2024. The OECD’s view of the economic prospects of the United States, China, and India has improved significantly.

Representatives of the organization also predict that the global economy will rise by 3.2% next year.

The change in the OECD forecast towards improvement is a signal that the global economic system is highly likely to be able to avoid the materialization of the stagflation scenario, which is an extremely negative state of affairs, combining the deterioration of the labor market situation, increased inflation and sluggish growth. The corresponding scenario will not be implemented even if the growth rate of the world economy does not reach 3.4% shortly.

The OECD urges the monetary authorities to be careful. In the relevant context, the organization warns that armed conflicts can provoke an increase in energy prices and accelerate inflation. The OECD also notes that the easing of price pressures in the service area may be slower than the pace currently expected. The organization underlined that monetary policy should be prudent to ensure long-term containment of underlying inflationary pressures.

Representatives of the OECD said that in the context of the global economic recovery, the divergence between the high growth rates in the United States and the slower dynamic in Europe will remain shortly. Against this background, according to them, a mixed macroeconomic landscape will form.

As we have reported earlier, IMF Raises Growth Forecast for US Economy.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.