People walk in the rain across London Bridge in central London. Date of photo: Tuesday, March 12, 2024.
Lucy North – Pa Images | Pa images | Getty Images
Britain's “sluggish” growth prospects have ensured that the country will be the worst-performing economy of all advanced countries next year, according to new forecasts from the Organization for Economic Co-operation and Development.
Britain's gross domestic product (GDP) is expected to grow by 0.4% in 2024, up from a previous forecast of 0.7%, and less than all other G7 countries except Germany (0.2%), said the Paris-based think tank in its report Thursday. latest global economic outlook.
The UK economy is expected to grow by 1% in 2025, behind Canada, France, Germany, Japan and the US, as the lingering effects of high interest rates and inflation continue to weigh.
The gloomy forecast comes as the global economy shows signs of recovery, with growth set to remain stable at 3.1% in 2024 before rising modestly to 3.2% in 2025.
“We are starting to see some recovery in many parts of the world,” Alvaro Pereira, director of the OECD's policy studies department, told DailyExpertNews's Silvia Amaro on Thursday.
Growth among advanced countries is expected to be led by North America next year, following “strong growth” forecasts of 2.6% in the US in 2024, according to Pereira. Meanwhile, growth in Europe is expected to pick up next year after a sluggish 2024. .
There were also signs of strength among emerging economies, according to the OECD. In China, where the economy has struggled in part due to a prolonged downturn in the real estate market, growth forecasts were revised slightly upwards from previous forecasts, which Pereira said was due to “stronger performance than in the recent past” .
According to the OECD, the global outlook is an indication that central banks' efforts to curb inflation are working.
“Monetary policy is doing what it is supposed to do,” Pereira said. “Real incomes are starting to recover. This will benefit consumption. We also think inflation is starting to decline.”
However, he added that questions remain about how robust the global recovery would be, especially as central banks show signs of divergence on the future path of interest rates.
“The risk, of course, is that if inflation remains more persistent than we expect, it is of course possible that monetary policy will have to remain restrictive for a little longer,” Pereira said.
According to the OECD, headline inflation among the 38 member states is expected to fall from 6.9% in 2023 to 5% in 2024, before falling further to 3.4% in 2025. By the end of 2025, inflation is expected to return to targets of around 2% in most major economies, the report said.