The Organisation for Economic Co-operation and Development – OECD has downgraded its economic growth forecast. The world economy is expected to expand by 2.9 percent this year, which is 0.1 percentage points less than the September forecast. The OECD forecasts the Slovenian economy to grow by 1.4 percent this year, which is 0.1 percentage points less than what the OECD predicted in its June forecast, and by 1.8 percent next year (down 0.8 percentage points).
The OECD has not changed its growth forecasts for next year, with world gross domestic product expected to expand by 2.7 percent in 2024, according to a report published on the OECD website. This could be the lowest global growth since the global financial crisis, if the first year of the Covid-19 pandemic is excluded, reads the website. However, a recovery in global economic growth to 3 percent in 2025 depends on a further slowdown in inflation and rapid growth in Asian economies.
Growth slows in Slovenia
Slovenia is forecast by the OECD to record a 1.4 percent growth this year, reflecting weak domestic and external demand. Growth in Slovenia is expected to pick up to 1.8 percent in 2024 and 2.7 percent in 2025. High inflation is holding back private consumption, but investment remains at the expense of European Union funding and measures to rebuild the country after the floods. Labour market conditions will remain unchanged, boosting wage growth, while inflationary pressures will lower real incomes.
Meanwhile, inflation in Slovenia is forecast by the OECD to reach 7.5 percent this year, easing to 4.8 percent next year and 3.2 percent in 2025. “Inflation is easing, but growth is slowing. The tightening of monetary policy needed to tackle inflation is taking effect. We forecast a soft landing for advanced economies, but this is far from guaranteed,” Clare Lombardelli, the organisation’s Chief Economist, wrote in the latest report.
The OECD kept its growth forecast for the euro area at 0.6 percent this year but cut it by 0.2 percentage points for next year, thus bringing it to 0.9 percent. The German economy is expected to contract slightly this year and to expand by 0.6 percent next year.
Sara Kovač
