The OECD has improved its forecast for the Russian economy

The Organization for Economic Co-operation and Development (OECD) has revised its estimates of the dynamics of the Russian economy this year: now, after expected in June, GDP fell by 1.5%, experts predict an increase of 0.8%. The forecast for 2024 has also been revised: from a fall of 0.4% to an increase of 0.9%. Inflation expectations in Russia were revised from 5.38% to 5.25% in 2023 and from 5.21% to 5.24% in 2024.

According to the OECD, the global economy will grow by 3% this year – against the 2.7% expected in June. At the same time, the forecast was lowered for 2024 – from 2.9% to 2.7%.

“Our expectations in today’s interim economic forecast generally coincide with the calculations of the previous [июньской] assessments. So far, a significant increase in stress in financial markets has been avoided following the instability of the banking sector at the beginning of the year. However, the global economy continues to face challenges of elevated inflation, low growth and relatively weak trade,” OECD Secretary-General Matthias Cormann was quoted as saying in a press release.

The OECD notes that, despite the slowdown in the Chinese economy, Asia continues to be the main driver of global growth; the four leading countries in terms of expected GDP dynamics for 2023 have not changed from the June forecast: it includes India (6.3%), China (5.1%), Indonesia (4.9%) and Turkey (4.3%). Mexico moved up to fourth place in this ranking, its forecast was improved from 2.6% to 3.3%. In fifth place is Brazil, its economy, according to OECD expectations, will grow by 3.2% instead of the previously expected 1.7%.

China’s growth estimates were lowered from June’s 5.4% to 5.1% for 2023 and from 5.1% to 4.6% for 2024. “Signs of slowing Chinese economic activity are concerning given China’s importance to global growth , trade and financial markets. High levels of debt and the scale of the problematic real estate sector create significant difficulties,” OECD experts point out. They said consumer spending had been slow to recover since the economy reopened, with households concentrating large amounts of savings amid a lack of large social safety nets. There have been many recent initiatives to support economic activity, including small cuts in interest rates, but the effectiveness of such measures is difficult to assess, the report says.

At the same time, the organization raised its forecast for US GDP. Thus, the American economy is expected to grow by 2.2% in 2023 – against the 1.6% expected in June. In 2024, growth will be 1.3%, instead of the previously expected 1%. The OECD’s forecasts for American inflation remained unchanged: this year it will be 3.81% (instead of 3.88%), in 2024 it will slow down to 2.61% (instead of 2.56%). “The US economy has so far shown surprising resilience to sharply higher interest rates, with household spending supported by a reduction in excess savings accumulated during the pandemic. It is expected that as savings continue to dwindle, tight financial conditions will have a more pronounced impact on the economy,” OECD experts estimate. They allow US GDP growth to slow to 1%.

The organization downgraded growth forecasts for the eurozone from June 0.9% to 0.6% for 2023, and from 1.5% to 1.1% for 2024. Inflation forecasts for 2023 were improved from 5.79 % to 5.52%, and for 2024 – from 3.22% to 2.96%. In the downward direction, OECD experts revised their expectations for German GDP dynamics this year: from 0% to -0.2% in 2023. The German economy will grow more slowly than previously expected – by 0.9% against previously expected 1 .3%. Inflation expectations for Germany were slightly improved, from 6.29% to 6.1% in 2023 and from 3.04% to 3.02% in 2024.