The global economy is likely to avoid a recession next year, but the worst energy crisis since the 1970s will trigger a sharp slowdown, with Europe the hardest hit, the OECD said on Tuesday, urging central banks to continue raising interest rates.
World economic growth is expected to slow from 3.1% this year to 2.2% next, before accelerating to 2.7% in 2024, the Organization for Economic Cooperation and Development said, marginally raising its forecast for 2022.
“Our central scenario is not a global recession, but a significant slowdown in growth for the world economy in 2023, as well as still high, albeit declining, inflation in many countries,” said OECD Acting Chief Economist Álvaro Santos. Pereira, in the most recent Economic Perspective report.
The OECD said the global slowdown is hitting economies unevenly, with Europe the hardest hit as Russia’s war in Ukraine hits both business activity and spikes energy prices.
The organization predicts the eurozone economy will slow from 3.3% this year to 0.5% in 2023, before recovering to expand by 1.4% in 2024.
This was slightly better than the latest OECD outlook in September, when growth was estimated at 3.1% for this year and 0.3% in 2023.
Outside the euro zone, the UK economy is expected to shrink by 0.4% next year as it grapples with rising interest rates, rising prices and weak confidence. Previously, the OECD expected growth of 0.2%.
The US economy is expected to hold up better, with growth estimated at 1.8% this year and slowing to 0.5% in 2023, before rising to 1.0% in 2024. The OECD previously expected growth of just 1 .5% this year in the world’s largest economy and its estimate for 2023 remained unchanged.
China, which is not a member of the OECD, is one of the few major economies that is expected to see acceleration of growth next year, after a wave of lockdowns against the Covid. Growth was estimated at 3.3% this year, going to 4.6% in 2023 and 4.1% in 2024, compared to previous forecasts for 2022 of 3.2% and 4.7% for 2023.
With energy prices likely to remain high, the OECD said central banks should continue raising interest rates to fight inflation, with signs that the first hikes in Brazil and the United States are bearing fruit.
The OECD calculates expansion in Brazil of 2.8% this year, falling to 1.2% in 2023 and 1.4% in 2024
Source: CNN Brasil
A journalist with over 7 years of experience in the news industry, currently working at World Stock Market as an author for the Entertainment section and also contributing to the Economics or finance section on a part-time basis. Has a passion for Entertainment and fashion topics, and has put in a lot of research and effort to provide accurate information to readers.
