2023 is shaping up to be better than expected. At least that’s what the OECD estimated on Tuesday, September 19, when it raised its global growth forecast for this year. It thus climbs by 0.3 points compared to the institution’s June forecasts and should therefore stand at 3%.
The United States and emerging countries are driving growth upwards
A great performance which can be explained by the dynamism of several countries. HAS start with the United States, whose growth could reach 2.2%, an upward revision of 0.6 points, thanks to a vigorous second quarter, indicates the Organization for Economic Cooperation and Development in a quarterly report on global growth and inflation prospects, entitled Coping with inflation and low growth.
The main emerging countries are also driving global economic activity upwards: Brazilian growth is expected at 3.2% (+1.5 points), India at 6.3% (+0.3 points), Russia at 0.8% (+2.3 points), and South Africa at 0.6% (+0.3 points). Among the Brics countries (Brazil, Russia, India, China, South Africa), only China saw its outlook revised downward, to 5.1%, a decline of 0.3 points.
The picture is much less rosy in the euro zone (the twenty countries to have adopted the single currency) “where demand is already moderate”, according to the OECD. Growth is expected at 0.6% for this year, a decline of 0.3 points compared to June, weighed down by Germany which could fall into recession and Italy whose forecast is reduced by 0.4 point, at 0.8%.
Good French growth in 2023
However, in France, 2023 promises to be under better auspices, since the OECD has raised its forecast to 1%, compared to 0.8% last June. It lines up like this on the expectations of the French government. As for the Banque de France, it also revised its projections upwards, on Monday going from 0.7% last June to 0.9% growth now, thus agreeing with those of INSEE. France is notably driven by dynamic exports in spring.
On the other hand, the Bank of France like the OECD are less optimistic for 2024. Thus, the international organization based in Paris has revised its growth forecast slightly downward for next year to 1.2%, against 1 .3% previously. The fault, according to her, is notably less vigorous European and global growth. Growth in the euro zone should in fact amount to 1.1%, a drop of 0.4 points compared to the OECD’s June forecasts, once again largely driven down by Germany.
Tightening of monetary policy
Another factor which is dragging down French growth and that of the euro zone: the increase in interest rates by central banks aimed at curbing inflation, like that announced last week by the European Central Bank ( ECB). The latter raised its rates for the tenth consecutive time. The institution thus increased its reference rate by 25 basis points.
Now at 4%, it is at the highest level in its history. The refinancing rate and the marginal loan facility rate are at 4.50% and 4.75%. In total, this latest increase brings to 450 basis points the increase in rates in the euro zone for more than a year. The objective is to reduce inflation to 2% which, last August, was still at 5.2% over one year.
A mission shared by the American Federal Reserve (Fed), which is also increasing rates in the hope of stemming inflation.
Global growth down 0.2% in 2024
“A key factor shaping global growth is the rise in interest rates in most major countries since the start of 2022”sums up the OECD.
Consequently, beyond France and the euro zone, it is the global growth forecast which was revised downwards in the OECD projections this Tuesday for 2024 falling to 2.7%, i.e. – 0.2 points. “The effect of restrictive monetary policy is becoming more and more visible”insists the Organization, which adds that, as a result, “Business and consumer confidence is trending downward.”
However, the monetary tightening carried out by central banks around the world is “ necessary », Judged, this Tuesday, the chief economist of the OECD Clare Lombardelli.
“ We are all seeing that rising rates are making their way through our economies. It is necessary to reduce inflation, but painful “, she said during a press conference.
And to conclude that “ monetary policy must remain restrictive until there are clear signals » of a reduction in inflationary pressures.