OECD keeps 2024 growth outlook, cites Mideast conflict as key concern

The Organization for Economic Cooperation and Development on Wednesday stuck to its growth forecast of 2.7 percent for the global economy in 2024, but expressed concern about heightened geopolitical risks amid the Israel-Hamas war.

While the growth in the global gross domestic product is projected to ease from 2.9 percent this year, the Paris-based organization revised upward the 2024 prospects for the U.S. economy to 1.5 percent growth and downgraded them for the eurozone to 0.9 percent growth.

Japan's economy is forecast to expand 1.0 percent in 2024, according to the latest economic outlook report, unchanged from the previous projection in September.

Despite slower growth concerns, China, a non-OECD member, is projected to see its economy grow at a slightly faster rate of 4.7 percent.

The OECD said the global outlook remains tilted to the downside. Escalation of violence in the Middle East following the October attack on Israel by the Palestinian militant group Hamas is "a key near-term concern, particularly if the conflict were to broaden," the report said, warning that growth will slow and inflation accelerate if the crisis significantly disrupts energy markets and major trade routes.

While central banks, particularly in the United States and Europe, have carried out aggressive interest rate hikes to curb inflation, the OECD said monetary policy should remain restrictive until clear signs emerge that underlying inflationary pressures are "durably lowered."

Japan, the only major advanced economy yet to tighten monetary policy, has achieved "above-trend" growth over the past year, but weaker-than-expected overseas demand, especially a slowdown in China, and further supply chain disruptions would slow growth, the report said.

"Persistent cost pressures and further monetary policy tightening in other advanced economies could create pressures on the monetary policy framework, necessitating abrupt changes," the OECD said, expecting a key gauge of inflation will stay at or above the Bank of Japan's 2 percent target through 2025.

© Kyodo News