OECD Economic Outlook, Volume 2023 Issue 2
The global economy continues to confront the challenges of persistent inflation and subdued growth prospects. GDP growth has been stronger than expected so far in 2023, but is now moderating as the impact of tighter financial conditions, weak trade growth and lower business and consumer confidence is increasingly felt. The slowdown is projected to be mild, with continued disinflation, but a growing divergence across economies is expected to persist in the near term. The Outlook underlines a range of risks, including the potential for disruptions to commodity markets and trade from heightened geopolitical tensions, uncertainty about the persistence of inflation, and the extent to which excess household savings will be run down. Key policy priorities are to ensure that inflation returns durably to target, address mounting fiscal pressures, revive global trade and improve the prospects for sustainable and inclusive growth in the medium term.
This issue includes an assessment of the global economic situation, and a chapter summarising developments and providing projections for each individual country. Coverage is provided for all OECD members as well as for selected partner economies.
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Euro area
GDP growth is projected to slow to 0.6% in 2023 before strengthening gradually to 0.9% in 2024 and 1.5% in 2025. Private consumption will be supported by tight labour markets and increasing real incomes as inflation recedes. At the same time, higher costs of financing and uncertainty will weigh on private investment. Wage growth is projected to ease only gradually over the projection period. Employment bottlenecks in services will keep core inflation elevated until mid-2025, despite ongoing reductions in headline inflation.