The OECD said that PARIS Global economic growth is not much changed since Russia invaded Ukraine a few months ago, due to the fact that energy and inflation crises are causing economic growth to spiral into recessions in major economies.
The Organisation for Economic Cooperation and Development said that global growth would slow to 2.2 per cent in 2023, down from a forecast in June of 2.8 per cent.
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.
After Russia attacked Ukraine, the global output for the next year is projected to be $2.8 trillion less than what was predicted by the OECD before Russia attacked Ukraine - a loss of income worldwide equivalent in size to the French economy.
The global economy has lost momentum because of Russia's unprovoked, unjustifiable and illegal war of aggression against Ukraine. In many economies, GDP growth has stalled, and economic indicators point to an extended slowdown, according to OECD Secretary-General Mathias Cormann.
The OECD projected that the euro zone's economic growth would slow down from 3.1 per cent this year to only 0.3 per cent in 2023, which implies that the 19- nation shared currency bloc would spend at least two straight quarters of contraction.
That was a major downgrade from the OECD's last economic outlook in June, when it predicted that the euro zone's economy would grow 1.6 per cent next year.
The OECD forecast that Germany's Russian-gas dependent economy would contract 0.7 per cent next year, slashed from a June estimate for 1.7 per cent growth.
The OECD warned that further disruptions to energy supplies would affect growth and boost inflation, especially in Europe, where they could knock activity back another 1.25 per centage point and boost inflation by 1.5 per centage points, pushing many countries into a recession for the full year 2023.
The United States was seen to be in a downturn as the U.S. Federal Reserve jacks up interest rates to get a handle on inflation, despite the fact that the United States is less dependent on imported energy than Europe.
The OECD forecast that the world's biggest economy will slow down from 1.5 per cent growth this year to only 0.5 per cent next year, down from June forecasts for 2.5 per cent in 2022 and 1.2 per cent in 2023.
China's strict measures to control the spread of COVID 19 this year meant that its economy was only 3.2 per cent this year and 4.7 per cent next year, while the OECD had previously predicted 4.4 per cent in 2022 and 4.9 per cent in 2023.
The OECD said that further rate hikes were needed to fight inflation despite the deteriorating outlook for major economies, and most major central banks' policy rates will top 4 per cent next year.
With many governments increasing support packages to help households and businesses cope with high inflation, the OECD said such measures should be temporary to keep costs down and not burden high post- COVID debts.