Hanging game - OECD expects weaker growth
There is still a long way to go before the economy in Germany and around the world takes off again. The Organization for Economic Cooperation and Development (OECD) expects slightly weaker growth in the global economy in the coming year. Following growth of 2.9 percent this year, growth of 2.7 percent is expected in 2024, the Organization for Economic Cooperation and Development (OECD) announced in Paris on Wednesday.
An increase of three percent is then expected in 2025, as incomes are set to rise and key interest rates are likely to fall. According to the OECD forecast, the German economy will grow by just 0.6 percent in 2024 and 1.2 percent in 2025 following a slight decline this year.
According to the OECD forecast, falling inflation and rising wages will support incomes and private consumption in Germany. However, high interest rates will have a negative impact on investments in residential construction and dampen export demand for capital goods from Germany. According to the OECD, however, other investments are gradually picking up. Exports are likely to recover slowly as global demand picks up, according to the OECD forecast.
German economy weakening - uncertainty surrounding Israel
The German economy is currently continuing to weaken, according to the economic barometer for November published by the German Institute for Economic Research (DIW Berlin) on Wednesday. "The German economy is struggling to emerge from the valley," said DIW economic expert Timm Bönke. High interest rates and only gradually increasing wages are weighing on the economy. "The positive contribution from foreign trade was unable to compensate for this until recently. And now the geopolitical uncertainties have increased considerably due to the war in the Middle East." According to the OECD forecast, the German economy will grow by 0.6 percent in 2024 and 1.2 percent in 2025 after a slight decline this year.
Meanwhile, economic sentiment in the eurozone has improved slightly more than expected. The Economic Sentiment Indicator (ESI) rose by 0.3 points compared to the previous month to 93.8 points, as the European Commission announced in Brussels on Wednesday.
For the USA, the OECD expects growth of 2.4% this year, which will slow to 1.5% in 2024 before picking up again slightly to 1.7% in 2025 - under the influence of an expected loosening of monetary policy.
Hardly any growth in the eurozone - many trouble spots worldwide
The eurozone was hit comparatively hard by the Russian war of aggression against Ukraine and the energy price shock. The OECD is forecasting growth of 0.6% there this year, rising to 0.9% in 2024 and 1.5% in 2025. In China, growth is expected to reach 5.2% this year, slowing to 4.7% in 2024 and 4.2% in 2025.
According to the OECD, the outlook is overshadowed by risks. These include geopolitical tensions, which have increased once again with Hamas' attack on Israel and the further development of this conflict. Growth and economic recovery could come under pressure as a result. On the other hand, higher consumer spending could boost growth if private households spend more of the savings they have accumulated since the coronavirus pandemic. However, this could also lead to inflation becoming more entrenched.
Globally, the OECD expects growth in emerging economies to be better than in industrialized countries. Growth in Europe will be relatively subdued compared to North America and the major Asian economies. The rise in consumer prices in the leading industrialized and emerging countries (G20 group) will continue to gradually decline. Inflation in most major economies is expected to be back on target by 2025.
- Despite the expected weaker growth in the global economy, as outlined by the OECD, some emerging economies are anticipated to exhibit better growth rates compared to industrialized countries.
- The economic situation worldwide is influenced by various factors, including the geopolitical tensions, as highlighted by the OECD, which could potentially impact growth and recovery in places like the Middle East, such as Israel.
Source: www.dpa.com
