The Organization for Economic Cooperation and Development has become the latest international institution to cut its predictions for global growth this year, but has downplayed the possibility of a prolonged period of so-called “stagflation.”
The OECD estimates that global GDP will hit 3 percent in 2022 — a 1.5 percentage point downgrade from a projection made in December.
“The invasion of Ukraine, along with shutdowns in major cities and ports in China due to the zero-COVID policy, has generated a new set of adverse shocks,” the Paris-based organization said in its latest economic outlook Wednesday.
Russia’s invasion of Ukraine is having massive ramifications on the global economy, but China’s zero-Covid policy — a strategy Beijing uses to control the virus with strict lockdowns — is also a drag on global growth given the importance of the country in international supply chains and overall consumption.
The World Bank said Tuesday that it had also turned more negative on global growth prospects. The institution said global GDP would reach 2.9 percent this year — an estimate lower from its 4.1 percent forecast in January.
The OECD said in its report Wednesday that the downgrade, in part, “reflects deep downturns in Russia and Ukraine.”
“But growth is set to be considerably weaker than expected in most economies, especially in Europe, where an embargo on oil and coal imports from Russia is incorporated in the projections for 2023,” it said.