London, Europe Brief News- The world economy will pay a “hefty price” for the war in Ukraine encompassing weaker growth, stronger inflation and potentially long-lasting damage to supply chains, the OECD said.
The organization slashed its outlook for global growth this year to 3% from the 4.5% it predicted in December and doubled its inflation projection to nearly 9% for its 38 member countries, according to forecasts released on Wednesday in Paris. In 2023, it expects growth to slow to 2.8%.
The price of war could be “even higher,” it warned, describing a long list of risks ranging from an abrupt cut-off of Russian supply in Europe to vulnerabilities on financial markets from high debt and elevated asset prices.
“There have been several significant changes in the global economic environment in recent months, including the worldwide spread of the Omicron variant of Covid and the greater-than-expected persistence of inflationary pressures,” the organization said in its economic outlook. “The single greatest change, however, is the economic impact of the war in Ukraine.”
The gloomy assessment, which echoes a similar warning from the World Bank, indicates a deeper and broader economic fallout from Russia’s invasion that will make it harder to set the right fiscal and monetary policies. This is the first detailed view from the OECD, which didn’t issue full forecasts in April because of the prevailing uncertainty.
