The boom of bleak economic forecasts continued on Wednesday as the Organization for Economic Co-operation and Development warned that Russia’s invasion of Ukraine fueled rapid inflation and slowed global growth.
Mathias Cormann, the organization’s secretary general, repeatedly emphasized that “we are not forecasting a recession at this time,” but he acknowledged that risks to the forecast were on the downside and would worsen if the war continued.
The organization, which represents 38 countries, including most of the world’s advanced economies, lowered its estimate of global growth this year to 3 percent from 4.5 percent it forecast late last year. It estimated that average inflation among the organization’s member countries was likely to be close to 9 percent this year, double its earlier forecast.
Many of the countries in the Baltic region are expected to do worse, with double-digit inflation.
Laurence Boone, the chief economist, looked at a chart showing each country’s growth during a press conference and referred to the “sea of red arrows” pointing downward.
On Tuesday, the World Bank released its own outlook, with a slightly lower forecast of 2.9 percent global growth this year.
Skyrocketing fuel and food prices, overwhelmed supply chains and Covid-related shutdowns, particularly in China, have exacerbated the economic crisis.
China, which has been an engine of growth in recent decades, has now turned into an “engine of volatility,” Mr Cormann said.
Both he and Ms. Boone stressed that the world was producing enough oil and grain to meet global demand. Wheat production in the past 12 months had in fact increased from the previous year, Mr Cormann said. And other oil-producing countries had the opportunity to replace any Russian oil withdrawn from the market, Ms Boone said. But the war, export controls, production limits, logistical tangles and other factors prevented these essential goods from reaching the most needy and low-income emerging countries.
There’s plenty of food, Mrs. Boone said. “The problem is getting it where it’s needed at affordable prices,” she added.
The economic consequences are felt most strongly in Europe. In Britain, a combination of high inflation, tax hikes and measures by the central bank to raise interest rates is expected to lead to zero growth next year, after rising 3.6 percent in 2022. Germany’s economy, Europe’s largest , is expected to grow below 2 percent over the next two years. Poland, which has taken in millions of Ukrainian refugees, is expected to have 4.4. percent growth this year and 1.8 percent the next.
In the United States, growth is expected to fall to 2.5 percent this year and 1.2 percent in 2023.
“The cost of living crisis will cause hardship and lead to famine,” the report said, following several warnings from other international organizations. At the same time, the organization underlined how uncertain any prediction could be given the vagaries of war, pandemic and more.
