OECD Raises 2024 Global Growth Forecast, Urges Higher Taxes to Combat Debt

The Organisation for Economic Co-operation and Development (OECD) slightly raised its global economic growth forecast for 2024 on Wednesday, while calling for increased property and environmental taxes to address rising debt levels in many countries.

In its latest report titled “Turning the Corner,” the Paris-based OECD projected that global gross domestic product (GDP) would grow by 3.2% in 2024, up from its previous estimate of 3.1%.

“Global output growth has remained resilient, and inflation has continued to moderate,” the report stated. The twice-yearly outlook also noted that central banks in the United States and Europe have begun cutting interest rates as inflation, which surged following the COVID-19 pandemic and Russia’s invasion of Ukraine, has started to cool.

Economic Performance Across Major Economies

The OECD highlighted relatively robust growth in key economies such as the United States, Brazil, Britain, India, and Indonesia. Russia’s GDP forecast was notably revised upward by 1.1 percentage points, now expected to grow by 3.7% in 2024.

However, the outlook for Europe’s largest economy, Germany, was downgraded slightly to 0.1% growth. Japan’s economy is expected to contract by 0.1%, and Argentina is projected to face a deeper economic downturn with a 4% contraction in GDP.

Rising Debt and Fiscal Challenges

Despite the improved global growth outlook, the OECD issued a stark warning about soaring debt levels, calling for urgent government action to address the issue. The report urged stronger efforts to control spending and increase revenue, citing concerns that ballooning debt could limit countries’ ability to respond to future economic shocks.

“Decisive fiscal actions are needed to ensure debt sustainability, preserve room for governments to react to future shocks, and generate resources to meet future spending pressures,” the OECD said.

The organisation pointed to several factors driving debt accumulation, including aging populations, climate change initiatives, and increased defense spending. Global public debt surged to a record $97 trillion in 2022, according to a United Nations report.

To alleviate the growing debt burden, the OECD called for increased revenue from indirect taxes, environmental levies, and property taxes. The report also highlighted the need to eliminate “distortive tax expenditures” in many countries. Recent political campaigns, including that of US presidential candidate Kamala Harris, have advocated for higher taxes on corporations and wealthy individuals as part of broader efforts to address these fiscal challenges.

The OECD’s outlook underscores the delicate balance governments must strike between stimulating economic growth and managing rising debt, as they face ongoing global economic uncertainties.

Key Points:

1. Global Growth Forecast Raised: The OECD raised its 2024 global GDP growth forecast to 3.2%, up from the previous estimate of 3.1%, citing resilient output and moderating inflation.
2. Key Economies’ Performance: The report highlights strong growth in the U.S., Brazil, Britain, India, and Indonesia, while revising Russia’s GDP forecast upward to 3.7%. However, Germany’s outlook was lowered to 0.1% growth, and Japan’s economy is expected to contract by 0.1%.
3. Rising Global Debt: The OECD warned about increasing global public debt, which reached a record $97 trillion in 2022, and urged governments to take decisive fiscal actions to manage spending and raise revenue.
4. Call for Higher Taxes: To address fiscal challenges, the OECD recommended increasing indirect, property, and environmental taxes, and eliminating “distortive tax expenditures” in many countries.
5. Economic Uncertainty: While inflation has eased and growth remains steady, the OECD cautioned that without sustained action, rising debt could limit governments’ ability to react to future economic shocks.
6. Key Points:
7. Global Growth Forecast Raised: The OECD raised its 2024 global GDP growth forecast to 3.2%, up from the previous estimate of 3.1%, citing resilient output and moderating inflation.
8. Key Economies’ Performance: The report highlights strong growth in the U.S., Brazil, Britain, India, and Indonesia, while revising Russia’s GDP forecast upward to 3.7%. However, Germany’s outlook was lowered to 0.1% growth, and Japan’s economy is expected to contract by 0.1%.
9. Rising Global Debt: The OECD warned about increasing global public debt, which reached a record $97 trillion in 2022, and urged governments to take decisive fiscal actions to manage spending and raise revenue.
10. Call for Higher Taxes: To address fiscal challenges, the OECD recommended increasing indirect, property, and environmental taxes, and eliminating “distortive tax expenditures” in many countries.
11. Economic Uncertainty: While inflation has eased and growth remains steady, the OECD cautioned that without sustained action, rising debt could limit governments’ ability to react to future economic shocks.