Reasons for the OECD to cut global GDP to 2.2% in 2023

The world economy will grow 2.2% in 2023, the OECD estimated on Monday, which lowered its previous forecast by six tenths because of the “price of war” in Ukraine and the rise in interest rates to contain inflation.

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“A loss of economic momentum is visible globally, but especially in Europe,” said the Organization for Economic Co-operation and Development (OECD), which keeps global expansion unchanged at 3% in 2022. Russia launched on February 24, an offensive in Ukraine that has resulted in a global increase in energy and food prices for households and businesses, and in a brake on economic expansion in a post-pandemic world.

The conflict, which seems to be on the way to being long-lasting after the mobilization of Russian reservists, will provoke a loss of US$2.8 trillion in global revenue in 2023, estimated the Paris-based organization.

“Inflationary pressures are becoming more widespread, with rising energy, transport and other costs,” says the OECD, which revised global inflation upwards to 8.2% in 2022 and 6.6% in 2023.

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In addition to the effects of the war on prices, the rise in interest rates by central banks to contain inflation and the covid-19 pandemic are also weighing down the world economy, adds the OECD, which nevertheless asks to continue.

The OECD delivered its perspective for Argentina will grow 3.6% in 2022 and 0.4% in 2023; Brazil will do it in 2.5% and 0.9%; while Mexico will have a growth of 2.1% in 2022 and 1.5% in 2023.

AFP