Recession not inevitable, says OECD – and other economy stories you need to read this week

The global economy can avoid a recession next year, but the worst energy crisis since the 1970s will trigger a sharp slowdown and Europe will be hit hardest, according to the OECD. Fighting inflation should be policy-makers' top priority, it adds.

National outlooks vary widely, although Britain's economy is set to lag behind those of its peers, the OECD says. The global slowdown is hitting economies unevenly, it adds, with Europe bearing the brunt as Russia's war in Ukraine hits business activity and drives an energy price spike.

The OECD now forecasts that global economic growth will be 3.1% this year – slightly more than in its September projections – before dropping to 2.2% next year and then accelerating to 2.7% in 2024. It sees the eurozone growing by 3.3% this year then slowing to 0.5% in 2023 before recovering to expand by 1.4% in 2024.

"We are not predicting a recession, but we are certainly projecting a period of pronounced weakness,” OECD Head Mathias Cormann said.

A "substantial majority" of policy-makers at the latest US Federal Reserve meeting agreed it would "likely soon be appropriate" to slow the pace of interest rate hikes. The comments come as debate broadens over the implications of the US central bank's rapid tightening of monetary policy.

Fed officials are largely satisfied that they can increase rates in smaller, more deliberate steps as the economy adjusts to more expensive credit, Reuters reports, based on minutes from the bank’s 1-2 November meeting, where it raised its policy rate by three-quarters of a percentage point for the fourth straight time.

"A slower pace ... would better allow the [Federal Open Market] Committee to assess progress toward its goals of maximum employment and price stability," the minutes say. "The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited."

However, more important than the size of coming rate increases is an emerging focus on how high rates will need to rise to lower inflation, the minutes add.

The dollar – which has soared this year on the back of the rapid rate rises – slid against various trading partner currencies on the suggestion of a slowdown in the pace of increases.

China has indicated that it will boost monetary stimulus measures as it ramps up support for an economy under strain from surging COVID-19 cases and more lockdowns, Bloomberg reports.

One of Germany's main industry lobby groups has called for more support for industry to diversify trade beyond China, as the government prepares new policies aimed at reducing the economy's dependence on Beijing.

New Zealand's central bank has hiked interest rates by a record amount and warned that the economy might have to spend an entire year in recession to bring sky-high inflation under control.

Turkey’s central bank says it is ending its cycle of monetary easing, after President Recep Tayyip Erdogan ordered that interest rates fall to single digits by the end of the year. The Monetary Policy Committee promptly lowered the benchmark rate to 9% from 10.5%.

South Korea's central bank has slowed the pace of its interest rate hikes, sharply cut its 2023 growth forecast and tweaked the language it uses to describe its rates outlook, suggesting it could be headed towards the end of its monetary tightening cycle.

Japan’s government says "the economy is picking up moderately", but it remains cautious over risks from a global economic slowdown and financial market fluctuations. Manufacturing activity in Japan contracted at its fastest pace in two years in November because of strong inflationary pressures.

Singapore's key consumer price gauge rose by 5.1% in October, slightly less than forecast and marking the first easing in eight months. This was due to smaller rises in prices of utilities, retail, other goods and services.

The number of Americans filing new claims for jobless benefits has increased to a three-month high amid rising layoffs in the technology sector, but that likely does not suggest a material shift in labour market conditions, which remain tight.

As inflation and interest rates continue to go up, business closures and job losses are likely to become another hurdle for the global economy. Yet while most people would think of rising unemployment as a bad thing, some economists don’t entirely agree.

The gig economy has become an essential income source for a growing number of workers on both sides of the Atlantic. Here’s how policies can be implemented to level standards and working conditions across traditional employment and the gig economy.

The global energy crisis is hitting Japan particularly hard because it relies on energy imports. Here’s how the country is preparing.