The Organization for Economic Cooperation and Development has lowered its estimate on the 2023 real economic growth for the world by 0.6 percentage point from June to 2.2 pct, citing persistent upward pressure on prices and moves to raise interest rates to tame inflation in many countries.
"The global economy has been hit by Russia's invasion of Ukraine," the OECD said in its latest economic outlook report, released Monday, adding, "Global economic growth stalled in the second quarter of 2022, and indicators in many economies now point to an extended period of subdued growth." The OECD kept unchanged its real gross domestic product growth projection for 2022 at 3.0 pct.
Noting that the war has pushed up energy and food prices substantially, the Paris-based organization said, "One key factor slowing global growth is the ongoing generalized tightening of monetary policy in most major economies in response to the greater-than-expected overshoot of inflation targets over the past year."
High energy prices and other unfavorable factors "will negatively affect both private consumption and business investment," it said.
The energy crisis blamed on the Russian aggression has led to a spike in prices, especially in Europe, with inflation in the eurozone seen reaching 8.1 pct in 2022 and remaining high at 6.2 pct in 2023, the OECD said. Real GDP in the eurozone is expected to plunge to 0.3 pct in 2023 from 3.1 pct estimated for 2022, and the Germany economy is seen contracting 0.7 pct next year, according to the OECD.