On Wednesday, June 8, the Organization for Economic Cooperation and Development warned that Russia’s invasion of Ukraine is fueling rapid inflation and slowing global growth. (The OECD represents 38 countries including most of the world’s advanced economies.)
“We are not projecting a recession ” at this time, said Mathias Cormann, the organization’s secretary general, but the organization lowered its estimate of global growth to 3% in 2022 from the 4.% percent it predicted at the end of last year. It estimated that average inflation among the organization’s member nations was likely to run close to 9% this year, double its previous forecast.
The OECD growth downgrade follows on Tuesday’s warning from the World Bank that global growth would fall to 2.9% in 2022.
The OECD emphasized that the world was producing enough oil and grain to meet global demand. Wheat production over the past 12 months had, in fact, increased from the previous year, Cormann said. And other oil-producing nations had the ability to replace any Russian oil taken off the market. But the war, export controls, production limits, logistical tangles and other factors were preventing these essential commodities from reaching low-income and emerging countries that are most in need.
There is enough food, said Laurence Boone, the OECD’s chief economist. “The problem is getting it where it is needed at affordable prices.”
The economic slowdown will be most strongly felt in Europe. In the U.K., a combination of high inflation, tax increases, and moves by the central bank to raise interest rates is projected to result in zero growth in 2023 after a rise of 3.6% in 2022. Germany’s economy, the largest economy in Europe, is expected to have lower than 2% growth for the next two years. Poland, which has taken in millions of Ukrainian refugees, is forecast to have 4.4. percent growth this year, and 1.8 percent the next.
In the United States, growth is projected to drop to 2.5% this year and 1.2% in 2023.
