Belgium, (Brussels Morning Newspaper) The Organisation for Economic Co-operation and Development (OECD) warned that large economies are facing recessions due to inflation and energy crisis.
The OECD revised its global GDP growth for next year from 2.8% to 2.2%, but maintained the forecast for this year at 3%, according to Reuters reporting on Monday.
The OECD warned that the situation in Europe is difficult as economies are directly tied to Russia and its fossil fuel supplies, noting that expected global GDP is USD 2.8 trillion lower compared to before the start of the war in Ukraine.
Mathias Cormann, OECD Secretary General, pointed out in a statement that “the global economy has lost momentum in the wake of Russia’s unprovoked, unjustifiable and illegal war of aggression against Ukraine… GDP growth has stalled in many economies and economic indicators point to an extended slowdown.”
The OECD expects eurozone growth to stand at 3.1% this year and 0.3% next year, warning that it will face recession in 2023, defined as two consecutive quarters of GDP decline. Previously this year, the OECD predicted that eurozone GDP would grow 1.6% in 2023.
The organisation previously predicted that German GDP would grow 1.7% next year, but now expects it to contract 0.7%, pointing out that the economy is dependent on Russian fossil fuel.
EU vulnerable to disruptions
It warned that additional energy supply disruptions would strengthen inflation and weaken growth, which would push many EU member states into recession next year.
As for the US, the OECD pointed out that it is not as dependent on fossil fuel imports as the EU, but predicted that GDP growth will slow down next year and stand at 0.5% in contrast with previous forecast of 1.2%.
The OECD revised its prediction for China’s economic growth, noting that it previously expected GDP to grow 4.4% this year and 4.9% in 2023. It stressed that Beijing imposed strict measures aimed at curbing the spread of coronavirus, which is why it revised its growth predictions to 3.2% this year and 4.7% in 2023.
The organisation stressed the importance of upping interest rates to curb inflation, predicting that most large central banks will up rates at least 4% next year.
