Global growth slows amid ‘persistent’ high inflation: OECD

(AFP) – Global growth is expected to slow from 3.1 percent this year to 2.2 percent next year due to high inflation, before recovering slightly to 2.7 percent in 2024, the OECD said on Tuesday.

Amid the fallout from the Russian war in Ukraine, “growth has lost momentum, high inflation is proving persistent, confidence has waned and uncertainty is high,” the Organization for Economic Co-operation and Development said in its latest forecasts.

OECD chief economist Alvaro Santos Pereira said the global economy was “staggered by the biggest energy crisis since the 1970s”.

The energy shock has pushed inflation “to levels not seen in many decades” and hit economic growth around the world, he added.

Inflation was already rising before the conflict due to bottlenecks in the global supply chain after countries emerged from Covid lockdowns.

However, the Paris-based OECD said inflation in the group of top 20 economies will hit 8 percent in the fourth quarter of this year and fall to 5.5 percent in 2023 and 2024.

“Our central scenario is not a global recession, but a significant slowdown in global economic growth in 2023 and still high, albeit declining, inflation in many countries,” said Santos Pereira.

Tackling inflation is a “top policy priority,” the OECD said, as rising prices erode people’s purchasing power around the world.

It recommended tightening monetary policy in countries where inflation has remained high and targeting support measures for families and businesses to avoid worsening inflationary pressures, as energy costs “are likely to remain high and volatile for some time”.

And the 38-member OECD called for accelerating investment in the adoption and development of clean energy sources and technologies to diversify supply.

Gas and oil supplies from major producer Russia have been severely disrupted following its invasion of Ukraine. Western allies sanctioned its energy exports and saw supplies cut amid the standoff over the conflict.

The upheaval has pushed up energy costs and fueled decades of inflation in major economies, prompting central banks to raise interest rates to tame runaway prices.