The OECD believes the Australian economy will expand by 4.1 per cent this calendar year,down 0.1 percentage point on its June forecasts,with growth to drop to just 2 per cent in 2023. That is half a percentage point lower than it predicted almost four months ago.
While the economy is slowing,the organisation expects inflation to quicken. It has sharply revised up its forecasts for inflation in Australia,tipping it to average 6.1 per cent this year and then 4.4 per cent in 2023.
The OECD said central banks would have to continue lifting interest rates to bring inflation under control,noting countries including Australia – where it projects the cash rate will reach 3.6 per cent by next year – would be hit over the coming months.
“One key factor slowing global growth is the ongoing generalised tightening of monetary policy in most major economies in response to the greater than expected overshoot of inflation targets over the past year,” it said.
“Japan,Korea and Australia have somewhat stronger growth momentum currently than Europe and the United States,but that is projected to wane over the coming quarters,in part due to softer external demand.”
Globally,the OECD is now forecasting economic growth to be just 2.2 per cent in 2023,a 0.6 percentage point cut on its June predictions. Through 2021,the global economy expanded by 5.8 per cent.