OECD Projects Favorable Economic Growth for G20 Emerging Market Economies

The OECD forecasts stable economic growth in G20 emerging market economies, particularly India and Indonesia, driven by solid domestic demand. India's GDP growth is revised upward, while inflation across G20 economies is expected to decline over the next few years.

Economic growth in G20 emerging market economies, including India, is anticipated to remain stable, the Organisation for Economic Co-operation (OECD) reported. The Paris-based research body highlighted that domestic demand growth in countries like India and Indonesia is expected to persist.

'Solid domestic demand growth is projected to continue in India and Indonesia over the next two years,' the OECD reported. The organization has revised India's GDP growth upwards by 10 basis points to 6.7 percent for 2024-25 and by 20 basis points for 2025-26 to 6.8 percent.

Indonesia's GDP is forecasted to grow by 5.1 percent in 2024 and 5.2 percent in 2025. Meanwhile, India's GDP grew by an impressive 8.2 percent during the financial year 2023-24, maintaining its status as the fastest-growing major economy. It grew by 7.2 percent in 2022-23 and 8.7 percent in 2021-22.

Several global rating agencies and multilateral organizations have also revised India's growth forecasts upward. In China, growth is expected to be bolstered in the latter half of 2024 by increased government spending following a rise in local government bond issuance.

'Even so, the protracted correction in the real estate sector is anticipated to continue, and inadequate social safety nets and weak consumer confidence will remain a drag on private consumption growth, with GDP growth projected at 4.9 percent in 2024 and 4.5 percent in 2025,' the OECD reported. Brazil is expected to retain some of its solid economic momentum from the first half of 2024, aided by higher fiscal spending.

Growth remains strong in many G20 countries, including the United States, Brazil, India, Indonesia, and the United Kingdom. Aggregate consumer price inflation for G20 economies is projected to decline significantly, driven by lower commodity prices and easing service price inflation as labor cost pressures moderate.

Headline inflation in the G20 is expected to drop from 6.1 percent in 2023 to 5.4 percent in 2024 and further to 3.3 percent in 2025. 'Inflation in emerging-market economies is projected to remain generally higher than in advanced economies, although it will gradually ease,' the OECD added.

By the end of 2025, inflation is projected to be back to target in most G20 countries, the OECD stated.

(With inputs from agencies.)