PARIS - The global economy is growing faster than expected only a few months ago as inflation is converging more quickly than expected with central banks' targets, the OECD said on Thursday, upgrading its outlook.

The global economy would maintain the 3.1 percent growth rate seen last year and pick up marginally to 3.2 percent next year, the Organisation for Economic Cooperation and Development said, upgrading forecasts dating from February for growth of 2.9 percent this year and 3 percent in 2025.

A faster than expected fall in inflation set the stage for major central banks to begin rate cuts in the second half of the year while also fuelling gains in consumers' incomes, the OECD said in its latest Economic Outlook

A faster than expected fall in inflation set the stage for major central banks to begin rate cuts in the second half of the year while also fuelling gains in consumers' incomes, the OECD said in its latest Economic Outlook.

However, the speed of recoveries diverged widely, the OECD warned, saying lingering sluggishness in Europe and Japan was being offset by the United States, whose growth forecast was hiked to 2.6 percent this year from a previous estimate of 2.1 percent.

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Next year, US growth was expected to cool to a rate of 1.8 percent, up slightly from 1.7 percent in February.

While weakness in Germany would continue to weigh on the broader euro zone, the bloc's growth was projected to pick up from 0.7 percent this year to 1.5 percent next year as lower inflation boosts households' purchasing power and paves the way for rate cuts. The OECD had previously forecast euro zone growth of 0.6 percent this year and 1.3 percent in 2025.

Britain's outlook was one of the few to be downgraded with the OECD now forecasting only 0.4 percent this year compared with 0.7 percent previously. As interest rates start coming lower from the third quarter of this year, UK growth was seen picking up to 1 percent in 2025, compared with 1.2 percent expected in February.

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Meanwhile, in Japan, income gains, easy monetary policy and temporary tax cuts would help its growth rate to accelerate from 0.5 percent in 2024 to 1.1 percent in 2025, compared with forecasts of 1 percent for both years previously, the OECD said.