reporter Cui Puyu
Organization for Economic Cooperation and Development (OECD) said on Monday that the global economic growth slowdown will be greater than previously expected as the energy and inflation crisis may intensify and trigger recession in major economies.
OECD maintains global growth forecast for this year at 3% in the latest medium-term economic outlook, but lowers its growth forecast for next year to 2.2% from the previous 2.8%.
The agency's latest global economic output in 2023 is US$2.8 trillion lower than the forecast before the outbreak of the Russian-Ukrainian war, which is equivalent to France's economic scale in 2021. In a statement, OECD Secretary-General Mathias Cormann said that after the outbreak of the Russian-Ukrainian war, the global economy lost momentum, and the growth of GDP in many economies stagnated, and a number of indicators indicate that the economy will slow down further.
The Russian-Ukraine war pushed up global food and energy prices. Russia and Ukraine are both major exporters of food, and the former is also the world's major suppliers of energy and fertilizers.
Considering that Europe is the most direct economy affected by the Russian-Ukrainian war, OECD is particularly pessimistic about Europe's economic outlook. It is expected that the euro zone economy will only grow by 3.1% this year, a 0.5 percentage point lower than the forecast in June; it is expected that the GDP growth rate of euro zone in 2023 will slow down to 0.3%, a 1.3 percentage point lower than the previous expectations. The sharp slowdown in
's growth rate means that the region will fall into a technical recession for at least part of the year, namely, contracting for two consecutive quarters.
The Paris-based organization warned that if energy supply is further damaged, pushing up inflation, Europe's economic growth will slow by another 1.25 percentage points, while inflation rose by 1.5 percentage points, causing many countries to fall into recession throughout 2023.
Coleman pointed out at a press conference after the report that most major economies need to continue to tighten their monetary policy to curb inflation; government targeted fiscal stimulus measures are the key to restoring consumer and corporate confidence, and "the dual-pronged approach of monetary and fiscal policy is crucial."
As the Federal Reserve continues to raise interest rates to control inflation, the United States is also considered to be about to usher in an economic recession, although the country's dependence on imported energy is much lower than that of Europe.
OECD predicts that the US economy will grow by 1.5% and 0.5% this year and next year, both lower than the forecast of 2.5% and 1.2% in June; it is expected that China's economy will grow by 3.2% and 4.7% this year and next year, respectively, with the forecast of 4.4% and 4.9% in June, respectively.
At the same time, the agency predicts that the three countries with the fastest economic growth in the world in 2022 are Saudi Arabia , India and Indonesia , with annual GDP growth rates of 9.9%, 6.9% and 5% respectively.
Although the outlook for major economies deteriorates rapidly, the OECD said further interest rates are still needed to combat inflation, and the policy interest rate for most major central banks is expected to exceed 4% next year.
The agency said that under the pressure of energy, transportation and labor costs, the scope of inflation has become more extensive. However, as countries implement monetary tightening measures and slowing economic growth, the inflation rate of most G20 countries will peak in the fourth quarter of this year and fall back next year, but remains at a relatively high level.
OECD expects that the overall inflation rate of G20 will be 8.2% and 6.6% this year and next year, the inflation rate of the United States will be 6.2% and 3.4% this year and next year, and 2.2% and 3.1% in China.
