The drumbeat of bleak economic forecasts continued on Wednesday as the Organization for Economic Cooperation and Development warned that Russia’s invasion of Ukraine is fueling rapid inflation and slowing global growth.
Mathias Cormann, the organization’s secretary general, repeatedly emphasized that “we are not projecting a recession” at this time, but he acknowledged that risks to the forecast were on the downside, and would worsen if the war dragged on.
The organization, which represents 38 countries including most of the world’s advanced economies, lowered its estimate of global growth to 3 percent this year from the 4.5 percent it predicted at the end of last year. It estimated that average inflation among the organization’s member nations was likely to run close to 9 percent this year, double its previous forecast.
Many of the Baltic countries are expected to fare worse, with double-digit inflation.
Looking at a chart detailing each country’s growth during a news conference, Laurence Boone, the chief economist, referred to the “sea of red arrows” pointing downward.
On Tuesday, the World Bank issued its own outlook, with a slightly lower forecast of 2.9 percent global growth this year.
Skyrocketing fuel and food prices, overwhelmed supply chains and Covid-related closures, particularly in China, have aggravated the economic crisis.
China, which in recent decades has been an engine of growth, has now turned into an “engine of volatility,” Mr. Cormann said.
Both he and Ms. Boone emphasized that the world was producing enough oil and grain to meet global demand. Wheat production over the past 12 months had, in fact, increased from the previous year, Mr. Cormann said. And other oil-producing nations had the ability to replace any Russian oil taken off the market, Ms. Boone said. But the war, export controls, production limits, logistical tangles and other factors were preventing these essential commodities from reaching low-income and emerging countries that are most in need.
There is enough food, Ms. Boone said, “the problem is getting it where it is needed at affordable prices.”
The economic fallout is most strongly felt in Europe. In Britain, a combination of high inflation, tax increases and moves by the central bank to raise interest rates is expected to result in zero growth next year after a rise of 3.6 percent in 2022. Germany’s economy, the largest economy in Europe, is expected to have lower than 2 percent growth for the next two years. Poland, which has taken in millions of Ukrainian refugees, is forecast to have 4.4. percent growth this year, and 1.8 percent the next.
In the United States, growth is expected to drop to 2.5 percent this year and 1.2 percent in 2023.
“The cost of living crisis will cause hardship and risks famine,” the report said, echoing several other similar warnings from other international organizations. At the same time the organization underscored just how uncertain any forecast could be given the vagaries of war, pandemic and more.