LONDON (AP) – Russia’s war in Ukraine and its worsening energy and food crisis will severely slow global economic growth and raise inflation this year, the Organization for Economic Co-operation and Development said on Wednesday.
China’s “zero COVID” policies, which have further disrupted manufacturing supply chains, are also weighing on a global economy that is just beginning to recover from the COVID-19 pandemic. ‘OECD based in Paris, becoming the last institution to reduce its growth forecast and underlining the blurred economic outlook.
The OECD, a club of largely wealthy nations, expects the world economy to expand by 3% by 2022, below the 4.5% it predicted in December.
Inflation is forecast at almost 9% for the 38 OECD member countries, including the United States, the United Kingdom and many European nations, almost double the previous estimate.
The World Bank, the United Nations and the International Monetary Fund have recently made similar cuts to their economic forecasts.
“The Russian war is putting a high price on the world economy,” OECD Secretary-General Mathias Cormann told a news conference in Paris. He urged Russian President Vladimir Putin to “stop this atrocious and senseless war now.”
The organization released its forecast as it prepares for a two-day annual meeting from Thursday, which was attended by government ministers and with video comments from Ukrainian President Volodymyr Zelenskyy.
The OECD warned that the economic crisis will affect the poor more. The war is disrupting the supply of basic foodstuffs such as wheat and energy, of which Russia and Ukraine are the world’s leading suppliers, fueling inflation that consumes disposable income and living standards, he said.
War is further hurting the economic growth of European nations because they are more exposed to war through trade and energy links. But the OECD also sounded the alarm about the most remote poor countries facing food shortages.
“We are very concerned about the food situation in low-income countries. The war is really sending shockwaves to Africa and the Middle East,” said OECD chief economist Laurence Boone. “War could cause famine. It could provoke social unrest and political unrest.”
He said China, which has long been an engine of global growth, has become a source of economic volatility in “fattening supply chains” that the pandemic has already rejected.
China’s anti-pandemic policies involving draconian blockades in Shanghai and other cities have paralyzed economic life. This has left an accumulation of container vessels waiting to dock at Chinese ports and companies around the world facing problems with the delivery of their goods, highlighting the bottlenecks in the supply chain that threaten to raising prices for consumers, Boone said.