The global monetary policy response to runaway inflation across major economic regions after the darkest days of the pandemic appears poised to weigh more heavily on growth as we close in on 2024, according to a recent report by the Organization for Economic Co-operation and Development (OECD). Citing the growing influence of the cumulative effects of aggressive rate hikes, commonly referred to as the ‘monetary policy lag,’ stubbornly elevated core (less food & energy) inflation, and the newly minted headwind of rising energy prices around the globe, the OECD forecasts that global growth will slow to a lackluster 3% this year (versus 3.3% 2022) and decelerate further to 2.7% in 2024, which would mark the second weakest annual advance since the Great Financial Crisis (GFC). A deeper dive into regional and country-specific forecasts revealed that two G-20 nations, Germany and Argentina, are projected to have negative GDP growth for 2023 (-0.2% and -2.0%), with the United States and China forecasted to slow during 2024, from 2.2% and 5.1% this year to 1.3% and 4.6% respectively, along with some improvement in the Eurozone (0.6%/1.1% 2023/24).
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