World economy ‘paying price of war’

The world economy will take a bigger hit next year than previously forecasted due to the effects of Russia’s war in Ukraine, the Organisation for Economic Co-operation and Development (OECD) said Monday.

In a bleak report titled “paying the price of war”, the Paris-based organisation noted that the conflict aggravated inflationary pressure when the cost of living was already rising quickly.

“The world is paying a very heavy price for Russia’s aggression against Ukraine,” OECD Secretary-General Mathias Cormann said in a news conference.

“Households and firms are suffering as costs rise and purchasing power is taking a hit,” Cormann said.

Covid outbreaks are still having an impact on the global economy while growth has also been affected by rising interest rates as central banks scramble to cool red-hot prices, said the OECD.

“A number of indicators have taken a turn for the worse, and the global growth outlook has darkened,” said the global research organisation in the report.

Global growth stalled in the second quarter of this year and data in many economies “now point to an extended period of subdued growth,” said the report.

The organisation slashed its 2023 growth forecast for the global economy to 2.2%, down from 2.8% in its previous estimate in June. “The central scenario is not a global recession, but risks have increased in the past few months,” said the OECD’s interim Chief Economist Alvaro Pereira.

To highlight the impact of Russia’s invasion of Ukraine, the OECD said global output in 2023 is now projected to be $2.8 trillion lower than previously estimated before the conflict in December 2021.

Published in The Express Tribune, September 27^th, 2022.

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