“Business and consumer confidence is improving, food and energy prices are falling and the Chinese economy is reopening,” the OECD summarized the reasons for its more optimistic outlook. The organization expects headline inflation to “gradually ease” in most G20 countries, at 5.9 percent this year and 4.5 percent next year.
However, the economic recovery is only just beginning to emerge and several downside risks remain, the OECD warned. These included the further course of the Ukraine war, the uncertain situation on the energy markets and the difficult-to-predict consequences of further increases in interest rates – although these dampen inflation, they can also slow down growth. The effect of monetary policy could “further reveal risks in the financial and banking sector,” it said, referring to the current problems in the US.
When it comes to growth in the individual countries, the OECD forecasts significant differences in some cases. For example, she assumes an increase in gross domestic product of 5.3 percent for China, 1.5 percent for the USA and only 0.3 percent for Germany – this is still below the value of the forecast for the euro area with 0, 8 percent. For Russia, the OECD expects the economy to contract by 2.5 percent this year.
