OECD cuts forecast to 2023 as Ukraine crisis cited as drag on growth – Reuters
The Organization for Economic Co-operation and Development, or OECD, marked global economic growth for the next two years on Wednesday, citing the Russian-Ukrainian conflict as a major cause.
The OECD now expects the global expansion to slow sharply to around 3% this year and 2.8% in 2023, two levels well below the recovery projected in its last economic outlook report released in December.
The Paris-based organization expects inflation to average 8.8% this year among its 38 members, which include some of the biggest economies. He said that in some advanced economies inflation is now expected to reach levels not seen since the 1970s, as is already the case in Germany, the United States and the United Kingdom.
China’s economy is expected to grow 4.4% in 2022 and 4.9% in 2023, according to the OECD.
“Amid growing headwinds, growth will be supported by investments in climate transition and frontloading of infrastructure projects,” the report said.
He also said real estate investment in China will remain weak, but exports will remain relatively strong. And China’s large oil and grain reserves will mitigate the impact of rising global energy and food prices.
The OECD cut U.S. GDP growth to 2.46% for 2022, down from 3.73% in its December forecast. Inflation in the United States will reach 5.9% against 4.4% in the December forecast.
The organization said the economic and social impact of the conflict is strongest in Europe, reflecting vulnerabilities with more expensive energy imports and refugee flows.
The European Union, Russia’s biggest energy customer, said it would phase out Russian coal imports in August while imposing a partial ban on Russian oil by the end of the year.
Real GDP growth in the 19-member Eurozone is expected to be 2.6% this year and 1.6% in 2023.
OECD Secretary General Mathias Cormann said he did not foresee a recession but a slowdown in growth.
“Countries around the world are being hit by rising commodity prices, which are adding to inflationary pressures and dampening real incomes and spending, holding back the recovery,” he told a conference. press for the latest report.
He described the Russian-Ukrainian conflict as having led to “lower real incomes, weaker growth and fewer job opportunities around the world”.
The OECD said uncertainty surrounding the outlook is high, with significant downside risks and it is unclear how long the conflict will last and how much worse it could get.
Many low-income and emerging economies will be further challenged by rising food and energy prices, slowing demand growth in their export markets and the potential for capital outflows as interest rates are rising in advanced countries, the OECD said. He warned that the COVID-19 pandemic is not over and more aggressive or contagious variants could emerge.
“The outlook is sobering,” said OECD chief economist Laurence Boone, adding that the world was already paying the price for the Russian-Ukrainian conflict. “The choices made by policy makers and citizens will be crucial in determining how high that price will be and how the burden will be shared. Starvation is not a price the world should pay.”
Asked by China Daily whether Western sanctions against Russia are having a negative impact on global economic growth and supply chains, Cormann and Boone dodged the question and instead pointed out that sanctions are effective in harming the Russian economy.
The OECD forecast came a day after the World Bank cut global economic growth to 2.9% this year from the 4.1% it forecast in January.