The industrialized nations organization OECD takes a cautious look at the development of the global economy. After 3.2 percent growth last year, economic output is only likely to grow by 2.6 percent this year and 2.9 percent next year.

The OECD announced in Paris that this was below the long-term growth trend. But consumer and business sentiment is slowly improving, inflationary pressures are easing and China is reopening.

Inflation should slowly decline

According to the OECD, inflation should ease gradually in most G20 countries over the course of the year, falling from 8.1 percent last year to 5.9 percent this year and 4.5 percent next year. Tighter monetary policy is beginning to take effect and energy prices are falling after the mild winter in Europe.

For Germany, the OECD expects the inflation rate to fall from 8.7 to 6.7 percent this year and 3.1 percent next year. The gross domestic product is likely to increase by 0.3 percent, next year the German economy is then expected to grow by 1.7 percent. For the euro area, the OECD expects growth of 0.8 percent this year and 1.5 percent in 2024, when the effect of high energy prices wears off.

Uncertainty due to the Ukraine war

However, the OECD also warned that the economic recovery is only just beginning to emerge. There are still clear risks of a downturn. Uncertainty about the course of the Russian war of aggression against Ukraine is central.

It is difficult to assess what additional effect the changed monetary policy will have. Further risks could arise in the financial and banking sectors, which could make it difficult for some countries to service their debts. In addition, the pressure on the global energy markets could increase again and result in higher prices for consumers. Monetary policy must remain restrictive until there are clear signs of lower inflation.

The OECD also warned that tax measures must be handled very carefully and targeted at those most in need. This is the only way to cushion high prices for food and energy.