THE Organisation for Economic Co-operation and Development (OECD) revealed this Wednesday that Spain will continue its strong price increases until at least the end of 2025 in its report. Economic outlook. So, the I think thank you advanced economies predicts that Spanish inflation stands at 3% in 2024, i.e. 6 tenths above the average of euro zoneand 2.1% in 2025, above the level that central banks consider as price stability.
Thus, the OECD breaks with the optimism of the government, which focused only on assessing the organization’s economic growth prospects. That is, the Executive considered that the most relevant aspect of the report is that the I think thank you considers that the Gross domestic product Spanish GDP will increase more than expected.
However, the organization has raised its outlook for global economic growth. Specifically, the OECD predicts that the World GDP It will be 3.2% on average in 2024, or 4 tenths more than the Spanish rate, which will be 2.8%.
Sharp price increases
The report therefore does not leave Spain in such a good position, as it predicts that the strong price increases that the country has been suffering for several years will continue. The OECD maintains its forecasts of moderation in the general inflation rate in Spain, estimating that it will be reduced to 3% this year, compared to 3.4% last year, and predicts that by 2025 this rate will fall to 2.1%, a tenth more than in the previous projection.
However, these levels remain above price stability. “The Governing Council of the ECB (European Central Bank) considers that the best way to maintain price stability in the eurozone is to have an inflation target of 2% in the medium term,” explains the Bank of Spain.
As for the core inflationwhich excludes energy and food prices because of their volatility, the organization is more optimistic. It expects it to moderate to 2.6% this year, below the 2.9% forecast in May, and maintains its projection of 2.2% for 2025.
Comparatively, the general inflation in Spain (3%) would remain above the Eurozone average in 2024, estimated at 2.4%, but in 2025 the two indices would converge at 2.1%. Regarding core inflation, Spain would have a rate this year slightly below the Eurozone average (2.6% versus 2.8%), and in 2025 the two would coincide at 2.2%.
Economic growth prospects
“It is expected that the global GDP growth stabilize at 3.2% in 2024 and 2025, with stronger disinflation, an improvement in real incomes and a monetary policy less restrictive in many economies, which will help support demand,” the OECD said. “Inflation is projected to return to its target in most G20 countries by the end of 2025,” it said.
Overall, the new OECD projections for the world’s major economies paint a mixed picture:
- USA: Growth of 2.6% is expected in 2024 and 1.6% in 2025, remaining unchanged in the short term. However, the slowdown will be more moderate thanks to the easing of monetary policy by the Federal Reservewhich will have a positive impact in the second half of 2025
- Eurozone: The OECD forecasts growth of 0.7% in 2024, similar to previous forecasts, and a slight decline for 2025, with growth of 1.3%, due to the recovery in real incomes and the fall in interest rates.
- United Kingdom: GDP growth will be 1.1% in 2024 and 1.2% in 2025, figures revised upwards
- Japan: A decline of 0.1% is expected in 2024, but will recover with growth of 1.4% in 2025, an improvement of three tenths
- China: China’s economy will grow 4.9 percent this year and 4.5 percent in 2025, it said, maintaining its forecast. However, the slowdown is attributed to the prolonged crisis in the real estate sector and weak consumer confidence.
- Brazil: Its growth has been revised upwards, projecting an increase of 2.9% in 2024 and 2.6% in 2025, driven by public spending
- India: Strong growth of 6.7% is expected in 2024 and 6.8% in 2025, with improvements compared to previous projections
- South Africa: Growth forecasts will be maintained at 1% in 2024 and 1.4% in 2025
These figures reflect a global context of moderating growth, with some emerging economies such as India and Brazil showing an improvement in their prospects.
