Economy

Europe to be hardest hit by world recession -OECD

  • International progress is projected to say no from 3.1% in 2022 to 2.2% in 2023.
  • Nationwide views differ extensively because the UK lags behind in different economies
  • Central banks urged to maintain elevating rates of interest

PARIS, Nov 22 (Reuters) – The worldwide economic system ought to keep away from recession subsequent yr, however the worst power disaster because the Nineteen Seventies may set off the worst recession, with Europe hit exhausting and preventing inflation must be a precedence for policymakers, the OECD stated. .

Nationwide views range extensively, though Britain’s economic system is lagging behind main friends, the Group for Financial Co-operation and Growth stated on Tuesday.

International financial progress is forecast to gradual from 3.1% this yr – barely greater than the OECD had anticipated in its September forecasts – to 2.2% subsequent yr and to 2.7% in 2024.

“We’re not predicting a recession, however we’re actually projecting a interval of weak spot,” OECD President Matthias Gorman advised a information convention to current the group’s newest financial outlook.

The OECD stated the worldwide recession is hitting economies disproportionately, with Europe bearing the brunt as Russia’s conflict in Ukraine hits enterprise exercise and drives up power costs.

The 19-nation euro zone economic system is forecast to develop by 3.3% this yr, then gradual to 0.5% in 2023 earlier than increasing to 1.4% in 2024. That was barely higher than the three.1% progress estimated within the OECD’s September outlook. This yr and 0.3% in 2023.

The OECD forecasts a 0.3% contraction subsequent yr in regional heavyweight Germany, whose industrial economic system is closely depending on Russian power exports – much less dire than the 0.7% decline anticipated in September.

Even in Europe the outlook is totally different, with the French economic system, a lot much less depending on Russian gasoline and oil, anticipated to develop by 0.6% subsequent yr. Italy noticed progress of 0.2%, which means a number of quarterly contractions are doable.

Exterior the euro zone, the British economic system is seen shrinking by 0.4% subsequent yr because it struggles with rising rates of interest, inflation and weak confidence. The OECD earlier anticipated progress of 0.2%.

Reuters Graphics

The US economic system is anticipated to fare higher, with progress anticipated to gradual from 1.8% to 0.5% in 2023 earlier than choosing as much as 1.0% in 2024. The OECD expects the world’s largest economic system to develop by simply 1.5% this yr. Its estimate for 2023 was unchanged.

China, which isn’t an OECD member, is among the few main economies anticipated to select up progress subsequent yr after a wave of COVID lockdowns. This yr’s progress has elevated from 3.3% to 4.6% in 2023 and 4.1% in 2024, in comparison with earlier forecasts of three.2% in 2022 and 4.7% in 2023.

As tighter financial coverage takes impact and power value pressures ease, inflation in OECD nations is anticipated to gradual from greater than 9% this yr to five.1% by 2024.

“In financial coverage, additional tightening is required to firmly anchor inflation expectations in most superior economies and lots of rising market economies,” Gorman stated.

Whereas many governments have already spent closely to ease the ache of excessive inflation by means of power value caps, tax cuts and subsidies, the OECD stated larger spending means such help must be higher focused going ahead.

Report by Leigh Thomas; Enhancing by Catherine Evans

Our Requirements: Thomson Reuters Belief Rules.

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