A car is fueled at a gas station in Arlington, Virginia, the United States, Feb. 14, 2023. [Photo/Xinhua]

The global economy is expected to slow down slightly next year as a result of tightening monetary policies, weak trade and lower business and consumer confidence, the Organization for Economic Cooperation and Development (OECD) said Wednesday.

Its latest economic outlook report projected the global GDP growth at 2.9 percent in 2023, followed by a mild slowdown to 2.7 percent in 2024 and a slight improvement to 3 percent in 2025.

Asia is expected to continue to account for the bulk of the global growth in 2024-25, as it does in 2023, the report said.

As cost pressures moderate, consumer price inflation is expected to gradually ease back towards central bank targets in most economies by 2025. Inflation in OECD countries is expected to decline from 7 percent in 2023 to 5.2 percent in 2024 and 3.8 percent in 2025, it said.

"The global economy continues to confront the challenges of both low growth and elevated inflation, with a mild slowdown next year, mainly as a result of the necessary monetary policy tightening over the past two years. Inflation has declined from last year's peaks. We expect that inflation will be back at central bank targets by 2025 in most economies," said OECD Secretary-General Mathias Cormann in a statement.

"To secure stronger growth, we need to boost competition, investment and skills and improve multilateral cooperation to tackle common challenges, like reinvigorating global trade flows and delivering transformative action on climate change," he added.

The outlook report laid out a series of policy recommendations, underlining the need to continue policies aimed at bringing down inflation, reviving global trade and adapting fiscal policy to addressing long-term challenges.

The effects of the tightening of monetary policy since early 2022 are increasingly visible. Policy interest rates appear to be at or close to their peak in most economies. Monetary policy should remain restrictive until there are clear signs that inflationary pressures are durably reduced, it noted.

"Governments really need to start confronting the mounting challenges that public finances face, particularly from ageing populations and climate change," said OECD Chief Economist Clare Lombardelli.

"The global economy is grappling with inflation, slowing growth, and mounting fiscal pressures. Policymakers must prioritize macroeconomic stability, structural reforms, smart fiscal policies and international cooperation to foster sustainable and inclusive growth," she added.

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