(Bloomberg) — The world’s economic outlook is perking up as growth proves more resilient and inflation is set to cool faster than previously expected in many countries, the OECD said.
While conflicts in the Middle East or more persistent price increases could still knock the economy from its more stable footing, the Paris-based organization said risks are becoming “better balanced.”
The OECD raised the 2024 global growth forecast to 3.1% — from 2.9% in February — with notable improvements in its expectations for the US, China and India. The expansion should continue at 3.2% next year.
The brighter outlook indicates the world economy looks to avoid entering a stagflationary rut — a period of sluggish growth and rising unemployment mixed with elevated inflation — even if the pace of expansion won’t return soon to the 3.4% average in the years before the pandemic and energy crisis.
Inflation will be softer than the OECD forecast three months ago, with the exception of the US, where it now expects prices to rise 2.5% this year instead of 2.2%. Still, it said US policy makers should be able to reduce interest rates in the second half of the year.
On Wednesday in Washington, Federal Reserve Chair Jerome Powell kept hopes alive for a rate cut in 2024 while acknowledging that a burst of inflation has reduced policymakers’ confidence that price pressures are ebbing.
The OECD’s assessment corroborates the slightly more positive views of other international institutions, including the International Monetary Fund which also lifted its forecasts last month.
Read More: Factories Around the World Are Slowly Cranking Into Gear Again
“Cautious optimism has begun to take hold in the global economy, despite modest growth and the persistent shadow of geopolitical risks,” OECD Chief Economist Clare Lombardelli said. “Inflation is easing faster than expected, labor markets remain strong with unemployment at or near record lows.”
In the recovery, the OECD said divergence between strong growth in the US and a more sluggish Europe will persist in the near term, creating a “mixed macroeconomic landscape.” That will translate into differing paces of interest rate cuts, with the European Central Bank set to begin easing before the Fed.
Still, the OECD said monetary authorities should be cautious because conflicts could push up energy prices and inflation, and the softening of cost pressures may also be slower than expected in services.
“Monetary policy needs to remain prudent to ensure that underlying inflationary pressures are durably contained,” the OECD said.
For governments, it said the improving economic backdrop provides the opportunity to tackle bloated debt burdens that risk swelling further as higher borrowing costs feed through. It also cautioned countries will face growing spending demands from aging populations, climate change and needs to bolster defense.
“In the medium and longer term, the fiscal position is worrying,” Lombardelli said. “A robust medium-term approach to containing spending, building revenues, and focusing policy efforts on growth-enhancing structural reforms are all needed.”
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
