In its latest forecasts, the Organization for Economic Co-operation and Development (OECD) warned on Wednesday that the economic consequences of the war in Ukraine will greatly affect global growth and inflation this year.
The Paris-based OECD, consisting of 38 developed countries, chose not to publish its usual detailed forecasts in March due to the great uncertainty created by the Russian invasion of Ukraine.
Now, the organization projects 3% worldwide growth in 2022, which represents a sharp drop from the previous 4.5% forecast announced in December. In addition, inflation in member states is expected to double to 8.5%, the highest rate since 1988.
“The world will pay a high price for Russia’s war against Ukraine,” warned Laurence Boone, the organization’s number two and OECD chief economist, in his introduction to forecasts, entitled “The Price of War.”
“A humanitarian crisis is unfolding before our eyes, killing thousands, forcing millions of refugees to flee their homes, and threatening the ongoing economic recovery after two years of the pandemic,” he said.
The consequences of the war vary considerably by geographic region: the eurozone was particularly affected by growth projections, with a projection of 2.6% from 4.3% in December.
Estimates fell to 1.9% (-2.2 points) in Germany and 2.4% (-1.8 points) in France. Spain is up 4.1% (-1.47).
The UK is holding up with an improvement of 3.6% (-1.1%) this year, but is expected to stand at 0% in 2023 against the previous forecast of 2.1%.
In Latin America, Brazil is expected to grow by 0.6% in 2022 compared to the 1.4% forecast announced in December. Mexico will advance 1.9% (-1.4%), Argentina 3.6% (+1.1) and Colombia 6.1% (+1) this year.
The forecast for the United States points to a growth of 2.5% in 2022 versus the 3.7% in the December projection, while China should advance 4.4% (over 5.1%).
While inflation, which the OECD still considers “temporary” in September 2021, continues to rise, problems in supply chains continue as energy, food and metal prices rise due to the war.
The OECD expects pressures to ease in 2023, but warns that the scenario could get worse given the uncertainty.
The organization cites as examples the possible abrupt stoppage of Russia’s gas exports to Europe, further increases in energy prices, or continued disruptions in supply chains.
source: Noticias
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