The world will pay the “price of war” by 2023, warns the OECD (AFP / Eric PIERMONT)
The war in Ukraine will continue to be costly: the OECD has lowered its global growth forecast for next year in the face of more lasting effects than expected from the conflict, with Europe paying the biggest bill.
“The world is paying a very high price for Russia’s aggression in Ukraine,” the Organization for Economic Co-operation and Development Secretary-General Mathias Cormann told a press conference on Monday.
“Households and businesses are hurt,” he continued, pointing out that “the burden of higher energy and gas prices as well as China’s zero Covid policy means lower growth and higher inflation. high and steady”.
The lack of calm on the ground in the eighth month of Russia’s invasion of Ukraine, symbolized by the recent mobilization of reservists in Moscow, has encouraged the Paris-based international organization to be pessimistic.
In its quarterly report, entitled “paying the price of war”, the OECD predicts that after a difficult year 2022, mainly due to the inflationary outbreak, “global growth should continue to weaken in 2023” .
Revised OECD growth forecasts for the period 2021-2023 ( AFP / )
The OECD expects global GDP to grow by 2.2% against the 2.8% expected in June, although it maintained its forecast for 2022 at 3% after its decline in recent months.
“Inflationary pressures are broader, with increases in energy, transport and other costs affecting prices,” wrote the OECD, revising its 2023 forecast for the near future. all G20 countries except Turkey, Indonesia and the United Kingdom, whose economic activity will stop.
– 2.800 billion –
To show the extent of the shock of the war, the OECD assesses the financial loss expected next year at 2.800 billion dollars compared to the estimates before the arrival of the tanks in Ukraine, “the size- on the “French economy” measured by the annual GDP, said the acting chief economist of the institution, Alvaro Perreira.
It is logical that the neighboring countries of kyiv and Moscow will suffer the most important costs: the growth of the euro zone underwent the greatest change, up to 0.3% against 1.6% expected in June. Inflation is expected there this year at 8.1% and 6.2% next year.
Thick black smoke over the city of Kupyansk on September 24, 2022 in Kharkiv region, Ukraine (AFP / Yasuyoshi CHIBA)
Troubled for months as a major risk, the recession is the scenario adopted by the OECD for Germany: the first economy in Europe will see, according to the OECD, its GDP fall by 0.7% next year, a decrease of 2.4 points compared to the previous forecast.
Its main neighbors escaped it: the growth of 0.4% is expected in Italy, 1.5% in Spain, and 0.6% in France, where the government still counts on 1%.
The International Monetary Fund predicts the latest global panorama of 0.8% growth in Germany, 1% in France and 1.2% in the euro zone, but it may change the numbers below in October.
Among other major regions, the growth of the US is expected by the OECD at 0.5% against the 1.2% expected in June, and the growth of China at 4.7% against 4.9%.
– “Significant uncertainty” –
“Significant uncertainty surrounds these economic projections,” agreed the OECD, which faces the risk of energy shortages during the winter.
Crazy price increases are already threatening the activity of more and more companies.
The evolution of natural gas prices in Europe on the Dutch TTF market, in euros per MWh, on September 13 (AFP / )
According to the OECD, a greater shortage of gas than expected could, through a cascading effect, reduce the eurozone GDP by an additional 1.25 points next year, pushing many states into recession.
This scenario is particularly worrisome because central banks in developed and developing countries are firmly committed to raising their interest rates to contain inflation, with the risk of undermining growth there as well.
The rate hike was “a key factor” in the slowdown in employment, the OECD said, calling on central bankers to hold on, however.
War, rate hike, Covid-19, debt crisis… The OECD lists in its forecasts all the risks surrounding the economy. From there to lead to a decline in global GDP? “The central scenario is not a global recession but the risks have increased in recent months,” agreed Alvaro Pereira.
Targeted and temporary financial measures aimed at households and businesses as part of the emergency solution, highlighted the institution, confirming that until now the measures taken against the increase in energy prices “were not well targeted” , because it always benefits many households and businesses.