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OECD revises its global growth outlook upward for US performance

OECD revises its global growth outlook upward for US performance

The global economy is growing faster than expected a few months ago due to a slowdown in U.S. activity, while inflation is converging more quickly than expected toward central banks' targets, the OECD said on Thursday, raising its prospects.

The global economy maintained a growth rate of 3.1% last year and is expected to be 3.2% next year, the Organization for Economic Co-operation and Development (OECD) revised its forecasts from February to 2.9% growth. This year and 3% in 2025.

A faster-than-expected decline in inflation has set the stage for major central banks to start cutting rates in the second half of the year, while rising consumer incomes are spurring, the OECD said in its latest edition of its Economic Outlook.

However, the pace of recoveries varied sharply, with the United States warning that it was offsetting continued slowdowns in Europe and Japan, which raised its growth forecast to 2.6% this year compared to 2.1%. .

Next year, US growth is expected to slow to 1.8% from 1.7% in February.

With fiscal stimulus, China's economy is expected to grow faster than expected, to 4.9% in 2024 and 4.5% in 2025, up from 4.7% and 4.2% respectively in February.

While Germany's weakness will continue to weigh on the eurozone as a whole, the union's growth is expected to pick up from 0.7% this year to 1.5% next year, with a decline in inflation boosting household purchasing power and paving the way for interest rate cuts. The OECD Eurozone forecasts growth of 0.6% this year and 1.3% in 2025.

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Britain's outlook is one of the few to be downgraded, with the OECD forecasting growth of just 0.4% this year, down from 0.7% previously. UK growth is expected to pick up to 1% in 2025 from a forecast of 1.2% in February as interest rates begin to fall from the third quarter of this year.

In Japan, income gains, looser monetary policy and temporary tax cuts will boost growth from 0.5% in 2024 to 1.1% in 2025, compared with forecasts of 1% in the previous two years, the OECD said. (Reporting by Leigh Thomas; Editing by Philippa Fletcher)