The global economy remained resilient in the first half of 2024, and inflation has continued to moderate. These trends are projected to continue into 2025, with global growth stabilising at a moderate pace and inflation returning to target in most countries by the end of 2025. Key near term risks include persisting geopolitical and trade tensions, the possibility of a growth slowdown as labour market pressures fade, and potential disruptions in financial markets if the projected smooth disinflation path does not materialise.

The Interim Report says that policy interest rates should be lowered as inflation declines, though the timing and pace of rate reductions should be judged carefully to ensure that inflation returns durably to target. Stronger efforts to contain government spending, enhance revenues and improved budgetary frameworks are needed to ensure fiscal sustainability. Reinvigorating product market reforms to strengthen competition is an essential step to turn the corner on growth and help alleviate fiscal pressures.

The Interim Report is an update on the assessment in the May 2024 issues of the OECD Economic Outlook (Volume 2024 Issue 1).