Growth in the global economy is forecast to remain stable in the coming years, with Australian numbers picking up steam, according to the OECD.
The organisation’s latest Economic Outlook projects global GDP growth of 3.3 percent in 2025 and 2026, up from 3.2 percent this year, with the Australia’s GDP tipped to grow by 2.5 percent in 2026, up from 1.9 percent next year, and overtaking the United States.
OECD Secretary-General Mathias Cormann said the global economy was projected to remain resilient despite significant challenges.
Mr Cormann said inflation in the OECD was expected to ease further, from 5.4 percent this year to 3.8 percent in 2025 and three percent in 2026, supported by the still restrictive stance of monetary policy in most countries.
“Headline inflation has already returned to central bank targets in nearly half of the advanced economies and close to 60 percent of emerging market economies,” he said.
Mr Cormann said labour markets had gradually eased, yet unemployment remained low by historical standards.
He said strong nominal wage gains and continued disinflation had bolstered real household incomes.
“However, private consumption growth remains subdued in most countries, reflecting weak consumer confidence.”
Mr Cormann said growth prospects varied significantly across regions.
He said GDP growth in the United States was projected to be 2.8 percent in 2025, before slowing to 2.4 percent in 2026.
“In the euro area, the recovery in real household incomes, tight labour markets and reductions in policy interest rates continue to drive growth.”
Mr Cormann said euro area GDP growth was projected at 1.3 percent in 2025 and 1.5 percent in 2026.
He said growth in Japan was projected to expand by 1.5 percent in 2025, but then decline to 0.6 percent in 2026, with China expected to continue to slow, with GDP growth of 4.7 percent in 2025 and 4.4 percent in 2026.
“The global economy has proved resilient. Inflation has declined further towards central bank targets, while growth has remained stable.
“Significant challenges remain. Geopolitical tensions pose short-term risks, public debt ratios are high and medium-term growth prospects are too weak.”
Mr Cormann said policy action needed to safeguard macroeconomic stability – through monetary policy easing that was carefully calibrated to ensure inflationary pressures were durably contained and through fiscal policy that rebuilt fiscal space to preserve room to meet future spending pressures.
“To boost productivity and the foundations for growth, we must enhance education and skills development efforts, undo overly stringent constraints to business investment and successfully tackle the structural increase in labour shortages.”
Read the full OECD Economic Outlook.
