Global growth is set to hit 5.6% this year before moderating to
4.5% in 2022 and 3.2% in 2023, the Organisation for Economic
Cooperation and Development said in its latest economic outlook.
That was little changed from a previous forecast of 5.7% for
2021, while the forecast for 2022 was unchanged. The OECD did
not produce estimates for 2023 until now.
With the global economy rebounding strongly, companies are
struggling to meet a post-pandemic snap-back in customer demand,
causing inflation to shoot up worldwide as bottlenecks have
emerged in global supply chains.
Like most policymakers, the OECD said that the spike was
expected to be transitory and fade as demand and production
returned to normal.
"The main risk, however, is that inflation continues to surprise
on the upside, forcing the major central banks to tighten
monetary policy earlier and to a greater extent than projected,"
the OECD said.
Provided that that risk did not materialise, inflation in the
OECD as a whole was likely close to peaking at nearly 5% and
would gradually pull back to about 3% by 2023, the Paris-based
organisation said.
Against that backdrop, the best thing central banks can do for
now is wait for supply tensions to ease and signal they will act
if necessary, the OECD said.
Federal Reserve Chair Jerome Powell said on Tuesday that the
U.S. central bank should consider winding down of its
large-scale bond purchases faster amid a strong economy and
expectations that a surge in inflation will persist into the
middle of next year.
In the United States, the OECD forecast the world's biggest
economy would grow 5.6% this year, 3.7% in 2022 and 2.4% in
2023, down from previous projections of 6.0% in 2021 and 3.9% in
2022.
The outlook for China was also less optimistic, with growth
forecast at 8.1% in 2021 and 5.1% in both 2022 and 2023 whereas
previously the OECD had expected 8.5% in 2021 and 5.8% in 2022.
However, the outlook was slightly more upbeat for the euro zone
than previously expected with growth expected at 5.2% in 2021,
4.3% in 2022 and 2.5% in 2023 compared with previous forecasts
of 5.3% in 2021 and 4.6% 2022.
(Reporting by Leigh Thomas, Editing by William Maclean)
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