Eyes Openers
  • World News
  • Business
  • Stocks
  • Politics
  • World News
  • Business
  • Stocks
  • Politics

Eyes Openers

World News

Energy, inflation crises risk pushing big economies into recession — OECD

by September 27, 2022
September 27, 2022
Energy, inflation crises risk pushing big economies into recession — OECD

PARIS — Global economic growth is slowing more than was forecast a few months ago in the wake of Russia’s invasion of Ukraine, as energy and inflation crises risk snowballing into recessions in major economies, the Organisation for Economic Cooperation and Development (OECD) said on Monday.

While global growth this year was still expected at 3.0%, it is now projected to slow to 2.2% in 2023, revised down from a forecast in June of 2.8%, the OECD said.

The Paris-based policy forum was particularly pessimistic about the outlook in Europe — the most directly exposed economy to the fallout from Russia’s war in Ukraine.

Global output next year is now projected to be $2.8 trillion lower than the OECD forecast before Russia attacked Ukraine — a loss of income worldwide equivalent in size to the French economy.

“The global economy has lost momentum in the wake of Russia’s unprovoked, unjustifiable and illegal war of aggression against Ukraine. GDP growth has stalled in many economies and economic indicators point to an extended slowdown,” OECD Secretary-General Mathias Cormann said in a statement.

The OECD projected euro zone economic growth would slow from 3.1% this year to only 0.3% in 2023, which implies the 19-nation shared currency bloc would spend at least part of the year in a recession, defined as two straight quarters of contraction.

That marked a dramatic downgrade from the OECD’s last economic outlook in June, when it had forecast the euro zone’s economy would grow 1.6% next year.

The OECD was particularly gloomy about Germany’s Russian-gas dependent economy, forecasting it would contract 0.7% next year, slashed from a June estimate for 1.7% growth.

The OECD warned that further disruptions to energy supplies would hit growth and boost inflation, especially in Europe where they could knock activity back another 1.25 percentage points and boost inflation by 1.5 percentage points, pushing many countries into recession for the full year of 2023.

“Monetary policy will need to continue to tighten in most major economies to tame inflation durably,” Mr. Cormann told a news conference, adding that targeted fiscal stimulus from governments was also key to restoring consumer and business confidence.

“It’s critical that monetary and fiscal policy work hand in hand”, he said.

Though far less dependent on imported energy than Europe, the United States was seen skidding into a downturn as the US Federal Reserve jacks up interest rates to get a handle on inflation.

The OECD forecast that the world’s biggest economy would slow from 1.5% growth this year to only 0.5% next year, down from June forecasts for 2.5% in 2022 and 1.2% in 2023.

Meanwhile, China’s strict measures to control the spread of COVID-19 this year meant that its economy was set to grow only 3.2% this year and 4.7% next year, whereas the OECD had previously expected 4.4% in 2022 and 4.9% in 2023.

Despite the fast deteriorating outlook for major economies, the OECD said further rate hikes were needed to fight inflation, forecasting most major central banks’ policy rates would top 4% next year.

With many governments increasing support packages to help households and businesses cope with high inflation, the OECD said such measures should target those most in need and be temporary to keep down their cost and not further burden high post-COVID debts. — Reuters

previous post
Biden faces pressure to waive restriction as ship idles off Puerto Rico coast
next post
Banks pull mortgage deals in the face of soaring borrowing cost

Related Posts

China wants to ‘speed up’ its seizure of...

October 27, 2022

China reports almost 13,000 new COVID-related deaths for...

January 22, 2023

Meta to reinstate Donald Trump’s Facebook and Instagram...

January 26, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Popular Posts

    • 1

      Head of Republican Party mocks speaking abilities of Fetterman, Biden

      October 28, 2022
    • 2

      Biden’s unwarranted bragging about reducing the budget deficit

      September 26, 2022
    • 3

      Russian TV is very excited about Такер Карлсон’s Nord Stream theory

      September 30, 2022
    • 4

      Strong Sector Rotation To Financials, but will it be enough to turn the market back up?

      October 14, 2022
    • 5

      Mish’s Daily: Mid-September Column Highlights

      September 29, 2022

    Categories

    • Business (1,028)
    • Politics (1,212)
    • Stocks (423)
    • World News (778)
    • About Us
    • Contacts
    • Terms & Conditions
    • Privacy Policy
    • Email Whitelisting

    Disclaimer: EyesOpeners.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2023 EyesOpeners.com | All Rights Reserved