Persistent Inflation, Rising Interest Rates Will Weigh on Global Economy, OECD Predicts
U.S. News & World Report FRANKFURT, Germany (AP) The global economy must steer through a precarious recovery this year and next as inflation keeps dragging on household spending and higher interest rates weigh on growth, banks and markets.
That was the takeaway Wednesday from the latest economic outlook by the Paris-based Organization for Economic Cooperation and Development. The group, made up of 38 member countries, raised its growth forecast this year to 2.7% from an estimated 2.2% in November and foresaw only a tiny acceleration to 2.9% next year.
The rebound from the COVID-19 pandemic and energy price spike tied to Russia's invasion of Ukraine is likely to be weak by past standards, with average growth of 3.4% recorded in the pre-pandemic years 2013-2019.
The path ahead is fraught with risks, from escalation of Russia's war in Ukraine with a dam collapse Tuesday that the sides blamed on each other to debt troubles in developing countries and rapid interest rate hikes having unforeseen effects on banks and investors.
