Status: 11/22/2022 12:23 p.m
The Organization for Economic Co-operation and Development (OECD) is forecasting less growth and a great deal of uncertainty in the global economy. Germany then slides into a recession.
Russia’s war of aggression in Ukraine and the resulting energy crisis are having a massive impact on global economic growth. The increase in global economic output will only be 2.2 percent in 2023, the Organization for Economic Cooperation and Development (OECD) announced today in Paris. That is significantly less than expected before the war.
“Price the world economy pays”
The OECD assumes that growth will rise again to 2.7 percent in 2024. However, if there are energy shortages in the markets, it could be even weaker. “Higher inflation and lower growth are the hefty price the global economy is paying for Russia’s war in Ukraine,” the organization said. For 2022, the OECD forecasts growth in global gross domestic product (GDP) of 3.1 percent.
In terms of growth, Germany is considered one of the main losers in the current situation. After growth of 1.8 percent in the current year, the OECD expects GDP to fall by 0.3 percent in its forecast for 2023. In 2024, too, Germany will be one of the laggards in an international comparison, with estimated growth of 1.5 percent.
Growth is also faltering in the UK
According to the OECD, the engine of growth in Great Britain is sputtering at a similar rate. Here, the organization expects a decline in economic output of 0.4 percent for 2023 and mini-growth of just 0.2 percent in the following year. Only the Russian economy is shrinking even more among the large industrialized countries. The war in Ukraine and Western sanctions are likely to shrink GDP there by almost four percent this year and by 5.6 percent in 2023.
In contrast, the world’s two growth engines, the USA and China, will probably avoid a recession. For China, the organization expects growth of 4.6 percent for 2023, and the USA will achieve a mini plus of 0.5 percent over the full year, according to the forecast.
Further downside risks for the global economy
According to the study, a significant downside risk for the coming years arises from possible gas rationing in the next two winters if the planned support measures “do not sufficiently maintain the price incentives for gas savings”, it said. Last but not least, the corona pandemic remains a risk factor for the global economy: “New waves of the pandemic could further dampen private consumption or exacerbate bottlenecks in the supply chain.”