The OECD has again lowered its forecasts for Europe

The OECD has again lowered its forecasts for Europe

The OECD has once again reduced its growth expectations for Europe this year and next, so that it is the area, within the advanced economies, that will take the longest to recover, while the United States once again shows its resilience. on.

In its semiannual Outlook report published this Wednesday, the Organization for Economic Cooperation and Development (OECD) expects “a soft landing” for advanced economies as a whole, after confirming that rate hikes have resulted in effects sought to control inflation.

Developing countries should have a more dynamic behavior around the world and that will allow the world economy to grow by 2.9% in 2023, which will slow down in 2024 to remain at 2.7%, before recovering in the next year, with 3%.

The United States proved to be stronger than expected and that is why the authors of the study predict an increase in the gross domestic product (GDP) of 2.4% this year (two tenths more than they calculated in September and three more than in June. ) and 1.5% in 2024 (two tenths more than they said in September).

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The slowdown expected in the coming months in the world’s leading powers (like most of the world’s countries) should lead to a slight acceleration to reach a rate of 1.7% in 2025.

Europe, in the caboose

The situation was clearly not very favorable on the Old Continent. In the euro zone this year, growth, according to the OECD, is limited to a poor 0.6% (three tenths below the June estimate), with the fall in activity in an important country such as Germany (- 0.1 %) and somewhat disappointing figures in France (0.9%) and Italy (0.7%).

The positive surprise of the eurozone in 2023 is Spain, with an increase in GDP of 2.4%, the largest in the group, three tenths more than expected in June and one more than in September.

The authors of the study also revised their growth forecasts for the euro zone in 2024 due to high financing costs and high levels of uncertainty.

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They left it at a poor 0.9% (six tenths lower than in June and two lower than in September) and we will wait until 2025 to see a slightly more encouraging rate of 1.5% .

Outside the European Union, but also in the Old Continent, things will not be better in the United Kingdom, with an economic expansion of only 0.5% this year, 0.7% in 2024 and 1. 2% in 2025.

Costa Rica, leading the growth of the OECD

Costa Rica is the OECD country with the highest rate of economic growth not only this year (5.1%, compared to 4.9% for Iceland, in second position and the 1.7% average of the 38 members ), but also in 2024 (3.5%) , compared to 1.4% on average) and in 2025 (3.6%, compared to 1.8% in the OECD).

The situation in other members of Latin America is very different. The expectations for Mexico are favorable and better than six months ago, with GDP growth expected to be 3.4% this year, 2.5% in 2024 and 2% in 2025.

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For Colombia, however, things are getting worse, and growth should remain at 1.2% in 2023, 1.4% in 2024, before rising to 3% in 2025.

As for Chile, the stagnation this year due to the complex financing conditions due to the increase in interest rates and the consumption effect of the withdrawal of the Covid stimuli will be followed by a less strong recovery, in 1 , 8% in 2024 and 2.1% in 2025.

The OECD considers that interest rates are at or very close to the peak of the cycle in most advanced economies, although it does not want to rule out the need to raise the price of money if inflationary pressures persist.

One of its main concerns today is the weakness of world trade, which is not due to cyclical factors but due to structural reasons due to the application of strict protectionist measures.

In his opinion, a source of long-term prosperity for advanced economies and developing countries is missing.