The Organisation for Economic Cooperation and Development (OECD) has announced that the global economy is “turning a corner,” raising the UK’s growth forecast for 2024 to a rate surpassing that of Japan, Italy, and Germany. This marks a significant shift, as the UK had previously been predicted to lag behind its G7 counterparts.
The OECD’s latest outlook ranks the UK joint second among G7 nations in growth prospects, trailing only the US. It has upgraded the UK’s 2024 growth forecast to 1.1%, a notable increase from the 0.4% predicted in May. However, despite this positive trajectory, the UK is expected to experience the highest inflation rate in the G7, with inflation projected to remain at 2.7% in 2024.
The OECD’s chief economist, Álvaro Pereira, expressed surprise at the UK’s recovery strength following a contraction in 2023. Although business investment remains subdued, higher wages and low inflation have unexpectedly boosted consumer spending. Pereira emphasized the need for fiscal prudence to address debt levels without imposing severe austerity measures.
As global trade begins to return to pre-pandemic levels, challenges remain, particularly in Asia, where ports are struggling to accommodate increased shipping demands. Concerns about rising borrowing costs and food prices persist, especially in Germany, which has seen a significant disparity between wage growth and food price inflation since 2019.
