Paris, Jun 8 (EFE).- The war sparked by Russia’s invasion of Ukraine has dealt a serious blow to economic growth forecasts globally, but especially in Europe, the Organisation for Economic Co-operation and Development warned in its latest outlook Wednesday.
The OECD has revised figures across the board, warning that global GDP growth this year will cap at 3% compared to the 4.5% it predicted in April.
In its outlook, titled the Price of War, the economic body paints a bleak picture saying that Russia’s war and China’s strict Covid-19 policy have set the world on course for slowing growth and rising inflation at levels not seen since the 1970s.
“Prior to the war, the world economy was on track for a strong, albeit uneven, recovery from Covid-19. The conflict in Ukraine and the supply-chain disruptions exacerbated by shutdowns in China due to the zero-Covid policy are dealing a serious blow to the recovery,” the report said.
“Global GDP growth is now projected to slow sharply this year, to around 3%, and remain at a similar pace in 2023. This is well below the pace of recovery projected last December.”
Economic growth downgrades were particularly stark for European countries such as Germany, which is set to drop 2.19 percentile points to 1.9%, Italy, down 2.19 to 2.5% and the United Kingdom, expected to grow by 3.6% this year but could grind to a halt in 2023.
Russia’s economy, hobbled by Western sanctions in response to its brutal invasion of Ukraine, is expected to tumble into a recession this year at -10%, followed by -4.1% in 2023.
The consequences of Russia’s invasion is already being felt in poorer nations heavily dependent on imports such as grain.
“Russia and Ukraine are important suppliers in many commodity markets. Together they accounted for about 30% of global wheat exports, 20% for corn, mineral fertilizers and natural gas, and 11% for oil. Prices for these commodities increased sharply after the onset of the war,” the report said.
“Supply disruptions are rising, particularly threatening low-income countries that are highly dependent on Russia and Ukraine for basic food staples. With public budgets stretched by two years of the pandemic, these countries could struggle to provide food and energy at affordable rates to their populations, risking famine and social unrest.”EFE