OECD raises Russia growth forecast to 2.6% for 2024

OECD raises Russia growth forecast to 2.6% for 2024
The OECD added itself to the roster of those that have upgraded Russia's growth forecast for 2024, increasing its outlook from 1.8% to 2.6% for the full year. / bne IntelliNews
By bne IntelliNews May 5, 2024

The Organisation for Economic Co-operation and Development (OECD) has increased its GDP growth projection for Russia in 2024 from 1.8% to 2.6% in 2024, making it the sixth-fastest growing major economy globally this year.

For 2025, the OECD maintains its earlier prediction for Russia at a modest 1% growth, aligning closely with the International Monetary Fund's (IMF) revised forecasts which suggest a growth rate of 3.2% for 2024, improving from 1.1% to 1.8% for 2025. The Russian Ministry of Economic Development remains slightly more optimistic, anticipating growth rates of 2.8% and 2.3% for 2024 and 2025 respectively.

The OECD report also highlights a broader stability in global GDP growth, maintaining a steady pace at 3.1% for 2024, a slight rise from the earlier forecast of 2.9%.

Looking ahead to 2025, global growth is expected to marginally increase to 3.2%. However, Europe is stagnating. Germany, Japan and the United Kingdom are doing particularly badly, but their slow growth is offset by stronger than average growth in the United States, India, China and Russia.

The GDP of the EU-27 countries grew by an annualised 0.47%. This is below the long-term trend from 2010 to 2019, where GDP grew by an average of 0.39% per quarter, and 0.51% during 2017-2019, compared to a pre-2008 crisis growth of 0.68% per quarter from 2004 to 2007.

Germany is already in a recession with a GDP decline of 0.22% over the past year and a 0.12% decrease over two years, with only a 0.34% growth since the fourth quarter of 2019.

France has done a little better with 1.07% of growth over the past year, 1.91% over two years and 2.16% since the fourth quarter of 2019.

Italy saw a growth of 2.4% over the past year, an impressive 6.5% over two years, but a more modest 3.7% since the pre-COVID period of fourth quarter of 2019.

The OECD's updated forecasts for other significant economies include the United States, now expected to grow at 2.6% up from 2.1%, China at 4.9% from 4.7%, and India at 6.6% from 6.2%. Contrastingly, the United Kingdom is projected to display the slowest growth among OECD members in 2024, with an increase of only 0.4%, revised downwards from 0.7%. The UK is slated to exhibit the weakest performance in 2025 as well, with a forecast growth of merely 1%.

According to the OECD, while there are early "signs of improvement," global economic growth rates remain subdued by historical standards.

The report stresses that financial stability in OECD countries is likely to be challenged by high debt levels and escalating expenses, exacerbated by an ageing population.

By the end of 2025, inflation in most major Western economies is anticipated to realign with target levels, although core service price increases continue to exceed pre-pandemic trends significantly.

The OECD cautions that persistent inflation coupled with geopolitical risks, such as heightened tensions in the Middle East and supply disruptions in the Red Sea, may decelerate the anticipated cycle of interest rate reductions, thereby affecting global economic recovery.