The Organization for Economic Cooperation and Development (OECD) said that the outlook for the global economy continues to deteriorate, while the energy and inflation crises could trigger a recession in the largest economies.
According to the updated OECD forecasts, global GDP will grow by 3% in 2022, but will slow down to 2.2% next year (previous forecast: +2.8%). The OECD said that in 2023 global output will be $2.8 trillion less than predicted before the start of the Russian-Ukrainian conflict.
As for the outlook for the eurozone, the OECD expects GDP growth to be 3.1% in 2022 and slow down to 0.3% next year (previous forecast: +1.6%). Thus, the eurozone will spend at least part of the year in recession (two consecutive quarters of GDP contraction). Meanwhile, the OECD expects Germany's GDP to shrink by 0.7% in 2023 (previous forecast: +1.7%) against the background of the economy's dependence on Russian gas.
The OECD warned that further disruptions in energy supplies would negatively affect economic growth and increase inflationary pressures, especially in Europe, where they could reduce activity by another 1.25% and increase inflation by 1.5%, plunging many countries into recession for the whole of 2023.
As for the US economy, the OECD expects GDP growth to slow from 1.5% in 2022 (previous forecast: +2.5%) to 0.5% in 2023 (previous forecast: +1.2%).
Meanwhile, the OECD predicts that against the background of coronavirus restrictions, China's GDP will grow by 3.2% in 2022 (previous forecast: +4.4%) and by 4.7% in 2023 (previous forecast: +4.9%).