The OECD sees the world economy growing by 3%
LONDON (Reuters) – Russia’s invasion of Ukraine and the energy and food crises it has exacerbated will sharply dampen global economic growth and drive up inflation this year, the Cooperation Organization said on Wednesday. and Economic Development (OECD).
China’s zero-Covid policy, which has further scrambled manufacturing supply chains, is also weighing on a global economy that is just beginning to rebound from the coronavirus pandemic, according to the Paris-based OECD, the latest institution to report. cut its growth forecast and point out the darkening economic outlook.
The OECD, a club of vastly wealthy nations, expects the global economy to grow 3% in 2022, less than the 4.5% it predicted last December.
Inflation is forecast at nearly 9% for the 38 member countries of the group – which includes the United States, the United Kingdom and many European countries – almost double the previous estimate.
The World Bank, the United Nations and the International Monetary Fund have recently lowered their economic forecasts.
“Russia’s war is indeed exacting a heavy toll on the global economy,” OECD Secretary-General Mathias Cormann told a news conference in Paris. He urged Russian President Vladimir Putin to “stop this atrocious and senseless war now”.
The organization released its forecast as it prepares for a two-day annual meeting starting Thursday, which will be attended by government ministers and with video remarks by Ukrainian President Volodymyr Zelenskyy.
The OECD has warned that the economic turmoil will hit the poor the hardest. The ongoing war is disrupting the supply of basic foodstuffs like wheat and energy, of which Russia and Ukraine are the world’s main suppliers, stoking inflation that is eating away at disposable income and living standards.
War hurts the economic growth of European nations the most because they are more exposed to it through trade and energy ties. But the OECD has also sounded the alarm about poorer countries further afield facing food shortages.
“We are very concerned about the food situation in low-income countries. The war is really sending shock waves all the way to Africa and the Middle East,” said OECD chief economist Laurence Boone. “War could trigger famine. It could cause social unrest and political unrest.”
She said China, long an engine of global growth, had become a source of economic volatility by “erasing supply chains” already suffocated by the pandemic.
China’s pandemic policies involving draconian shutdowns in Shanghai, Beijing and other cities have crippled economic life. This has left a backlog of container ships waiting to dock at Chinese ports and companies around the world facing problems delivering their goods, highlighting supply chain bottlenecks threatening to drive up prices for consumers, Boone said.