Inflation main risk to economic outlook - OECD

The OECD warned on Wednesday (December 1) that inflation is the main risk to an otherwise upbeat global economic outlook.

With the global economy rebounding strongly, companies are struggling to meet a post-health crisis rise in customer demand, causing inflation to shoot up worldwide as bottlenecks have emerged in global supply chains.

The Paris-based organization said the spike was expected to be short-term and fade as demand and production returned to normal.

But the OECD said the key risk to their economic outlook was if inflation proved longer-term and rose further than currently expected.

Provided that did not happen, the group said inflation in the OECD as a whole was likely close to peaking at nearly 5% and would gradually pull back to about 3% by 2023.

However, Director General Mathias Cormann said the global recovery is uneven.

"GDP in most countries is now close to the pre-pandemic path. Massive fiscal and monetary support to households and firms from the outset of the crisis, the relatively rapid development of the vaccines, the accelerating budgetal transformation in the wake of the pandemic have all helped get us into this position. But the growth momentum is slowing and disparities in the recovery remain."

The OECD forecasts global growth is set to hit 5.6% this year before moderating to 4.5% in 2022.