OECD cuts global growth outlook to 3%

The Organization for Economic Cooperation and Development (OECD) has cut its global growth forecast to 3 percent in 2022, from 4.5 precent predicted in December, as it forecast 2023 growth to slow further to 2.8 percent.

The organisation in its OECD Economic Outlook, June 2022, said that Russia's war in Ukraine and the energy and food crises will severely drag down global economic growth and push up inflation this year.

The OECD's revised projection is a marginally ahead of the World Bank's 2.9 percent growth estimate that was released on June 7.

China's “zero-Covid" policies that have scrambled manufacturing supply chains also are weighing on a world economy that was just starting to rebound from the pandemic, the Paris-based OECD said.

Inflation is forecast at nearly 9% for the OECD's 38 member countries, which include the United States, United Kingdom and many European nations, nearly double the previous estimate.

The World Bank, the United Nations, and the International Monetary Fund have made similar downgrades to their economic forecasts recently.

“Russia's war is indeed imposing a heavy price on the global economy,” OECD Secretary-General Mathias Cormann said at a press conference in Paris.

The organisation released its forecast as it gears up for a two-day annual meeting starting Thursday, attended by government ministers and featuring video remarks by Ukrainian President Volodymyr Zelenskyy.

The OECD warned that the economic turmoil will hit the poor the hardest. The war is disrupting supplies of basic food like wheat and energy, of which Russia and Ukraine are major global suppliers, and that's fanning inflation that eats away at disposable income and living standards, it said.

The war is hurting economic growth in European nations the most because they are more exposed to the war through trade and energy links. But the OECD also raised the alarm about poor countries farther afield facing food shortages.

“We’re very concerned about the food situation in low-income countries. The war is really sending shockwaves all the way to Africa and the Middle East," OECD chief economist Laurence Boone said. “The war could spark starvation. It could cause political unrest and turmoil."