Global economic growth is slowing more than it was forecast a few months ago in the wake of Russia’s invasion of Ukraine, as energy and inflation crises risk snowballing into recessions in major economies, the Organization for Economic Cooperation and Development (OECD) warned Monday.
The Paris-based policy forum, though, sees the Turkish economy growing more than it estimated this year, following in the footsteps of several international financial organizations that also revised their forecasts upward after a stronger than expected second-quarter expansion.
While global growth this year is still expected at 3%, it is now projected to slow to 2.2% in 2023, revised down from a forecast in June of 2.8%, the OECD said in a bleak report titled “Paying the Price of War.”
The organization is particularly pessimistic about the outlook in Europe – the most directly exposed economy to the fallout from Russia’s war in Ukraine, which it said has aggravated inflationary pressure when the cost of living was already rising quickly.
Global output next year is now 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 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,” OECD Secretary-General Mathias Cormann said in a statement.
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, defined 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 eurozone’s economy would grow 1.6% next year.