Key facts
- The OECD forecasts UK interest rates will hold through 2024 and begin cuts in 2027.
- The OECD warns global growth could slide to 2.1% in 2026 if Middle East conflict prolongs energy disruptions.
- France's manufacturing sector contracted in May, with production and new orders declining.
- Input costs in France's manufacturing sector rose to a four-year high in May.
- Britain's budget watchdog will factor persistent inflation into future forecasts.
- Swiss watch exports fell in April compared to the previous year.
- Norges Bank has reduced Norway's economic growth forecast for 2024 and 2025.
- ISTAT has lowered Italy's 2026 GDP growth forecast to 0.7%.
- North Macedonia's GDP growth slowed to 3.1% in Q1.
- North Macedonia's Q1 slowdown was due to weaker industrial performance and exports.
The global economic outlook is darkening, with multiple indicators pointing to a slowdown and persistent inflationary pressures. The OECD forecasts that the Bank of England will hold interest rates steady throughout 2024, with cuts not expected until 2027. This projection is influenced by a weak UK jobs market and the lingering effects of an energy shock. The OECD also warns of a severe global slowdown, with potential recession if Middle East conflicts exacerbate energy disruptions, potentially reducing global growth to 2.1% in 2026. In line with these concerns, Britain's budget watchdog, the OBR, will incorporate persistent inflation into its upcoming forecasts, impacting government fiscal planning. France's manufacturing sector experienced a contraction in May, marked by declining production, new orders, and purchasing volumes. Supply chain pressures intensified, leading to the longest vendor delivery times since January 2023, while input costs reached a four-year high and output charges increased significantly. Norway's economic growth outlook has weakened, with Norges Bank reducing its forecasts for 2024 and 2025 due to anticipated lower global demand and the impact of higher interest rates. Italy's national statistics bureau, ISTAT, has revised its 2026 GDP growth forecast downwards to 0.7% from 0.8%, though it projects an improved average jobless rate of 5.5% for that year. The Italian government has also lowered its growth expectations. Swiss watch exports saw a decrease in April compared to the previous year, following a period where companies accelerated shipments to the US to preempt potential tariff hikes. In North Macedonia, GDP growth decelerated to 3.1% year-on-year in the first quarter, primarily driven by weaker industrial performance and a slowdown in export activity, though robust household consumption offered some economic support.