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Several European countries will fall into recession in 2023 if there are gas supply problems in the coming months, a scenario that could occur if the European Union’s 10% reduction in consumption is not achieved, the OECD warned.
The Organization for Economic Cooperation and Development, OECD, pointed out that world economic growth is slowing more than expected as a result of the Russian invasion of Ukraine, this because the global energy crisis and the increase in prices are at risk of turn into recessions in major economies.
The OECD noted that while global growth of 3% is still expected this year, it is now only forecast at 2.2% in 2023, which represents a downward revision of the 2.8% forecast made in June. .
The agency says it expects global output next year to be $2.8 trillion lower than OECD forecasts before Russia attacked Ukraine, a global revenue loss that for the world is equal to the size of the French economy.
“The world economy has lost momentum following Russia’s unprovoked, unjustifiable and illegal war of aggression against Ukraine. GDP growth has stagnated in many economies and economic indicators point to a prolonged slowdown,” said UN Secretary-General OECD, Mathias Cormann.
The OECD was particularly concerned about the German economy, which is dependent on Russian gas, forecasting that it would contract by 0.7% next year.
For the agency, eventual interruptions in the energy supply would affect growth and boost inflation, especially in Europe, where they could push activity back another 1.25 percentage points and trigger inflation by 1.5 points, which would lead many countries to recession in 2023.
“Monetary policy will need to continue to tighten in most major economies to bring inflation under control on a lasting basis,” Cormann told a news conference.
“It is essential that monetary and fiscal policy go hand in hand,” he added.
For the United States, the OECD predicted that it will go from 1.5% growth this year to just 0.5% next year, compared to June forecasts of 2.5% in 2022 and 1.2% in 2023.
The OECD recommended further interest rate hikes to fight inflation and forecast that major central banks would exceed 4% next year.
with Reuters
