September 27, 2022: The OECD said that global economic growth is slowing over what was forecast some months ago for Russia’s invasion of Ukraine, as energy and inflation crises risk snowballing into recessions in significant economies.
While global growth was still predicted at 3.0%, it is now projected to slow to 2.2% in 2023, edited down from a forecast of 2.8%, the Organisation for Economic Cooperation and Development added.
The Paris-based policy forum was quite pessimistic about the outlook in Europe, the most directly exposed economy to the fallout from the war in Ukraine.
In the future year, the international output is projected to be $2.8 trillion lower than the OECD forecast before Russia attacked Ukraine, a loss of income worldwide equivalent in size to the French economy.
“The global thrift has momentum in the wake of Russia’s unprovoked, unjustifiable and illegal war of aggression against Ukraine. GDP growth is stalling in many thrifts, and economic indicators point to an extended slowdown,” OECD Secretary-General Mathias Cormann said.
The OECD projected eurozone economic growth would slow from 3.1% this year to only 0.3% in 2023, which implies the 19-nation shared currency bloc would spend at least part of the year in a recession, said as two straight quarters of contraction.
That marked a dramatic downgrade from the OECD’s last economic outlook in June when it had forecast the euro zone’s economy would grow 1.6% next year.
The OECD was particularly gloomy about Germany’s Russian-gas-dependent economy, forecasting it would contract 0.7% next year, slashed from a June estimate for 1.7% growth.
The OECD warned that further disruptions to energy supplies would hit growth and boost inflation, especially in Europe, where they could knock activity back another 1.25 percentage points and increase inflation by 1.5 percentage points, pushing many countries into recession for the entire year 2023.
Though far less dependent on imported energy than Europe, the United States was caught skidding into a downturn as the U.S. Federal Reserve jacks up interest rates to handle inflation.
The OECD forecast that the world’s biggest economy would slow from 1.5% growth this year to only 0.5% next year, down from June forecasts for 2.5% in 2022 and 1.2% in 2023.
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