OECD: recovery will be fragile. Italy’s GDP at 0.6% this year and 1% in 2024 (it was 3.8% in 2022). Inflation will be more moderate, but more rate hikes will be needed

«Global growth – states the OECD in the Interim Economic Outlook presented today in Paris – slowed down to 3.2% in 2022, well below the level forecast at the beginning of the year, hampered by the impact of the war in Ukraine, the cost-of-living crisis and the slowdown in activity in China». It’s Italy? Italy’s GDP should go from 3.8% in 2022 to 0.6% in 2023 and 1% in 2024: this is what we read in the OECD’s intermediate economic perspectives presented today in Paris.
For the OECD, however, “more positive signs are beginning to emerge, with business and consumer confidence improving, the reduction in food and energy prices and the full reopening of China”. “Global growth – underlines the OECD – should remain below its trend level in 2023 and 2024, at 2.6% and 2.9% respectively, while the tightening on macroeconomic policies will continue to produce its effects . In 2023 and 2024, however, a progressive improvement is expected to coincide with the mitigation of the impact of high energy prices. In the United States, GDP growth is expected to contract from 1.5% in 2023 to 0.9% in 2024. In the Eurozone, growth is expected to fall to 0.8% in 2023, before recovering to 1.5% in 2023. % in 2024.
The improvement in the prospects for the global economy, therefore, is still fragile. Risks have become somewhat better balanced, but remain sloped to the downside. This is what the OECD experts point out in the interim outlook published today in which it is underlined that the uncertainty regarding the progress of the war in Ukraine and its consequences represents a key element of concern. The strength of the impact of monetary policy changes is difficult to assess and could continue to expose financial vulnerabilities due to high debt and inflated asset valuations, as well as in specific segments of the financial market. Furthermore, pressures could re-emerge in global energy markets, leading to new price spikes and higher inflation.
Inflation
“Inflation is expected to become progressively more moderate in 2023 and 2024, but remain above central bank targets until the second half of 2024 in most countries”: this is what we read in the OECD’s Interim Economic Outlook presented today at Paris. «In the G20 economies – continues the international body – inflation is expected to fall from 8.1% in 2022 to 4.5% in 2024. In the advanced economies of the G20, underlying inflation is expected to stabilize on average at 4% in 2023 and 2.5% in 2024» specifies the OECD. So do we need to raise rates further? Yes, according to the OECD. “Monetary policies must remain restrictive until clear signs of a lasting reduction in the underlying inflationary tensions are observed”: this is the warning launched by the OECD, on the day of the presentation of the OECD Interim Economic Outlook in Paris. “Further interest rate hikes are still needed in many economies, especially in the United States and the euro area,” underlines the OECD, adding: “Given the slow contraction of underlying inflation, key rates are likely to remain elevated for much of 2024.
For the international body, it is also necessary to ensure that aid aimed at mitigating the impact of food and energy prices is «more targeted to those who need it most. A better target and an appropriate reduction in the global level of aid would help ensure the sustainability of public finances, protect incentives to reduce energy consumption and contain a revival of demand in periods of high inflation» affirms the OECD.