Business & Economy

Global economy in slowdown, reels from worst energy crisis in decades

Paris, Nov 22 (EFE).- The global economy, bruised by the worst energy crisis since the 1970s and Russia’s invasion of Ukraine, is on track for an even greater slowdown than previously forecast with only “modest” bounce backs expected in 2024, the Organisation for Economic Co-operation and Development said in its updated economic outlook report Tuesday.

The OECD predicted global gross domestic product growth to slow to 3.1% this year and 2.2% in 2023, before a slight rebound of 2.7% in 2024.

“The global economy is reeling from the largest energy crisis since the 1970s. The energy shock has pushed up inflation to levels not seen for many decades and is lowering economic growth all around the world,” the OECD said in its stark report.

The study predicted a greater economic slowdown across all 38 OECD member states compared to its last outlook in June, with the exception of the Republic of Ireland, which has a GDP growth forecast of 3.8% in 2023, and Japan, with growth of 1.8%.

Moderate and temporary recessions are predicted in six member nations, many of which have been directly affected by the consequences of Russia’s invasion of Ukraine.

In 2023, Germany’s GDP is due to slump -0.3%; the United Kingdom -0.4%; Chile -0.5%; Sweden -0.6%; Finland -0.3% and Latvia -0.2%.

The eurozone’s GDP is expected to grow 0.5% next year compared to the 1.6% forecast in June’s outlook, similar to the United States, where GDP growth forecasts point to 0.5% down from 1.2% in the last report.

“Asia will be the main engine of growth in 2023 and 2024, whereas Europe, North America and South America will see very low growth,” the report said.

The OECD’s outlook indicated that Western sanctions drawn up to punish Russia for its invasion of Ukraine had yet failed to have the promised effect.

The organization in June predicted the Russian economy to shrink 10%, but it is now on track for a smaller recession of 3.9%. The study said its economy would drop into a recession of 5.6% next year.

“We are currently facing a very difficult economic outlook. Our central scenario is not a global recession, but a significant growth slowdown for the world economy in 2023, as well as still high, albeit declining, inflation in many countries,” the report said, adding that tackling inflation should be a “priority” for policymakers.


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