The global economy remains resilient, with inflation continuing to moderate and global trade starting to revive, the OECD has revealed in its 2025 Economic outlook.

Accordingly, lower inflation is providing a boost to real household income growth and spending, although consumer confidence has yet to recover to pre-pandemic levels in many countries.

“Labour market pressures continue to ease, though unemployment generally remains at or near historical lows. Real interest rates remain restrictive, but lower nominal yields have generated some early signs of revival in interest-sensitive housing and credit markets. Headline inflation has now returned to target in a rising number of advanced and emerging-market economies despite lingering pressures in service sectors”, it mentioned.

It pointed out that the global Gross Domestic Product growth is projected to be 3.2% this year and 3.3% in 2025 and 2026.

It added that low inflation, steady employment growth and less restrictive monetary policy will all help to underpin demand, despite some mild headwinds from the necessary tightening of fiscal policy in many countries.

“Some cross-country differences are likely to persist in the near-term but will fade as solid growth in the United States and Brazil starts to ease and the recovery in Europe gains pace. Buoyant domestic demand in India and Indonesia and the recently announced stimulus measures in China and Japan are expected to support continued strong growth in Asia”, it explained.

It stated that annual consumer price inflation in the G20 countries is expected to moderate to 3.5% and 2.9% in 2025 and 2026 respectively, from 5.4% this year.

“By the end of 2025 or early 2026, inflation is projected to be back to target in almost all major economies”, it added.