UK's Economic Growth Rate Over Next 2 Years, Worst Among G20 Except Russia

OECD Projects 0.4% GDP Decline Next Year

Rishi Sunak, Prime Minister of the United Kingdom [Photo by EPA Yonhap News]

[Asia Economy Reporter Park Byung-hee] The Organisation for Economic Co-operation and Development (OECD) has predicted that the United Kingdom will record the worst economic growth rate among the major 20 countries (G20), excluding Russia, over the next two years.

According to major foreign media on the 22nd (local time), the OECD stated in a report released that the UK's gross domestic product (GDP) is expected to shrink by 0.4% next year and grow by only 0.2% in 2024.

Alvaro Santos Pereira, Acting Chief Economist of the OECD, pointed out that the economic changes following Brexit (the UK's withdrawal from the European Union (EU)) are causing persistent and complex uncertainties for the UK economy. He emphasized the need for the UK to establish new trade relationships post-Brexit.

The OECD noted that the UK's labor shortage and the government's energy subsidy policies could exacerbate inflation.

The UK economy is already in a severe recession. Among the Group of Seven (G7) countries, the UK is the only one that has not recovered its GDP to pre-COVID-19 pandemic levels.

The central bank, the Bank of England (BOE), warned at its monetary policy meeting on the 2nd that the recession had already begun last summer and could continue into the first half of 2024, potentially becoming the longest recession since data collection began.

The UK Office for Budget Responsibility (OBR) announced on the 17th that due to rising inflation, mortgage interest rates, falling real estate prices, and increasing unemployment, the real disposable income of UK households is expected to decrease by 4.3% in the 2022?2023 fiscal year. It explained that this is the largest decline since the real disposable income data began being compiled in the 1956?1957 fiscal year. The OBR added that real disposable income is also expected to decline by 2.8% in the 2023?2024 fiscal year.

The OECD forecasted that the economic growth rates of the United States and the Eurozone will be limited to 0.5% next year, with Germany expected to enter a recession. It stated that emerging markets will lead global economic growth, projected at 2.2%.

The OECD warned that the energy crisis will continue next year. It predicted that Europe will face a more severe gas shortage than this year, which could lead to a recession.

The OECD noted that while inflation rates are clearly slowing in the United States and Brazil, Eurozone inflation is expected to rise by 6.8% next year. It further projected a slowdown to 3.4% in 2024.

This content was produced with the assistance of AI translation services.