The global economy will avoid a recession next year and European countries will be hardest hit by the worst energy crisis since 1970, according to an updated forecast from the Organization for Economic Co-operation and Development (OECD) published on Tuesday, Nov. 22.
OECD analysts predict that global economic growth will slow from 3.1 percent this year to 2.2 percent in 2023 and then accelerate to 2.7 percent in 2024. “We are not predicting a recession, but we are certainly predicting a period of pronounced weakening,” says Matthias Kormann, head of the OECD.
The organization stressed that the global economic slowdown was unevenly distributed around the world and that the biggest blow will fall on Europe as the Russian invasion of Ukraine affected business activities and led to a jump in energy prices.
OECD predicts recession in Germany and UK
The OECD expects the economies of the 19 eurozone countries to grow by 3.3 percent this year, slow to 0.5 percent next year and 1.4 percent in 2024.
The organization has improved its forecast for Germany’s GDP, but still expects a recession in Germany, whose industrial-oriented economy is heavily dependent on energy imports from Russia. The German economy will shrink by 0.3 percent next year as the OECD raised its expectations after a September forecast of a 0.7 percent decline.
The French economy will grow by 0.6 percent in 2023, the Italian economy by 0.2 percent. The OECD has released its forecast for British economy – instead of a growth of 0.2 percent, analysts now expect a decline of 0.4 percent.
Russia is facing three years of recession
For the Russian economy, OECD analysts predict three years of recession: a decline of 3.9 percent this year, 5.6 percent next year and 0.2 percent in 2024.
“On monetary policy, in most advanced economies and in many emerging markets, further tightening is needed to keep inflation expectations firmly in place,” Kormann warned.