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Germany expected to bear the brunt of global economic slowdown, according to OECD


Sep 19, 2023

The Organization for Economic Co-operation and Development (OECD) has issued a warning that Germany will be severely affected by the global economic slowdown. The country is predicted to experience a contraction in its economy, making it the only G20 nation, besides Argentina, to experience this decline. The OECD attributes this downturn to rising interest rates and weakened global trade. Additionally, Germany’s manufacturing-heavy economy is struggling compared to other European countries, and it is facing the pressures of stubborn inflation and rising interest rates. The OECD has downgraded Germany’s growth forecast, with the expected contraction being revised to 0.2% for this year. China’s weaker-than-expected growth is also impacting Germany as it is a key trading partner. According to the OECD, the combination of factors, including imports and exports to China, make Germany more susceptible to the country’s slowdown. The OECD does not anticipate a recession in any major economy but highlights that economic activity remains weak and could further slow down if inflation remains high or if China’s economic activity worsens. The organization predicts overall global economic growth to remain below normal for this year and next, with projected growth rates of 3% in 2023 and 2.7% in 2024. The UK is expected to have the highest inflation rate among the G20 countries, following Turkey and Argentina, and this could impact economic growth. Central banks have been urged to maintain “restrictive” interest rates until underlying inflationary pressures show signs of abating. However, this could have negative effects on business and consumer confidence, potentially leading to slower economic growth. It is anticipated that major central banks, such as the European Central Bank, the US Federal Reserve, and the Bank of England, will adjust their interest rates accordingly. Monetary policy is expected to impact demand, potentially leading to a decrease in growth.

By Editor

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