World growth and France: OECD forecasts

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After the Banque de France, it is the turn of the OECD to make its forecasts. The Organization for Economic Co-operation and Development revised, this Tuesday, September 19, its French growth forecast for 2023 to 1%, thanks to a vigorous second quarter, but was more cautious for 2024 with 1.2% expected against 1.3 % during its June forecast.

The forecast from the Organization for Economic Co-operation and Development published in its quarterly forecasts for global growth and inflation thus aligns with that of the French government for this year. The OECD forecast 0.8% growth in France so far for 2023.

The same forecast as that of INSEE

Already on Monday, the Banque de France said it was more optimistic than before for the French economy in 2023, anticipating 0.9% growth compared to 0.7% so far, thanks to dynamic exports in the spring, and after growth of 2.5% last year.

This OECD forecast for 2023 is the same as that of INSEE (National Institute of Statistics and Economic Studies) published at the beginning of September, which had also been revised upwards.

France would fare well this year compared to Germany, a heavyweight in the euro zone which should end up in recession this year, according to most forecasts, including those published by the OECD on Tuesday.

A downward growth forecast in France for 2024

The International Organization based in Paris, on the other hand, revised its growth forecast for 2024 in France slightly downwards (1.2% expected compared to 1.3% previously). The fault, according to the OECD, in particular is less vigorous European and global growth and interest rate increases by central banks aimed at curbing inflation, like that announced last week by the European Central Bank. (ECB).

For the euro zone, the OECD forecasts growth of 1.1% in 2024, down 0.4 points compared to its June forecasts, mainly weighed down by Germany. Inflation in France should begin to gradually decline, the international organization also predicts, with 5.8% expected this year, and 2.9% next year. Ditto in the eurozone with 5.5% this year and 3% next year, which could encourage the ECB to adopt a less restrictive monetary policy.

A global growth forecast for this year of 3%

The OECD also raised its global growth forecast for this year to 3% on Tuesday but lowered that for 2024, warning that activity will remain weighed down by inflation and the high level of interest rates again this year. next.

“The effect of restrictive monetary policy is becoming more and more visible,” notes the Organization for Economic Cooperation and Development in a quarterly report on the outlook for growth and inflation in the world, lowering its forecast for 2024 growth at 2.7% (-0.2 points).

As a result, “business and consumer confidence is trending downward,” adds the Paris-based institution in its report entitled “Facing inflation and low growth.”

Central banks across the planet have been engaged for more than eighteen months in sharp increases in interest rates in order to curb inflation revived by the pandemic and the war in Ukraine. “A key factor shaping global growth is the rise in interest rates in most major countries since the start of 2022,” the OECD continues in its report. This growth will, however, be a little better than previously expected, since on an international scale it should appear at 3%, up 0.3 points compared to the institution’s June forecasts.

Growth of 2.2% for the United States

Several countries came to boost this figure a little, including the United States which could experience an expansion of 2.2%, an upward revision of 0.6 points compared to June, thanks to a second vigorous quarter.

The main emerging countries are also driving global economic activity upwards: Brazilian growth is expected at 3.2% (+1.5 points), India at 6.3% (+0.3 points), Russia at 0.8% (+2.3 points), and South Africa at 0.6% (+0.3 points). Among the “Brics” countries, only China has seen its outlook revised downward, to 5.1%, a decline of 0.3 points.

In the euro zone, on the other hand, “where demand is already moderate” according to the OECD, growth is expected at 0.6% for this year, a decline of 0.3 points compared to June, weighed down by Germany which could fall into recession and Italy whose forecast is reduced by 0.4 points, to 0.8%.

The euro zone should, however, recover in 2024 with 1.1% growth, “as the negative impact of high inflation on income fades”, notes the OECD.