The world economy will lose even more than expected because of russia's aggression against Ukraine. Next year, the world will fall short of $2.8 trillion, the club of the most developed countries of the OECD calculated. Among the 20 leading economies of the world, russia will suffer the most.
Source. BBC, citing the OECD forecast. The latest forecast is called The Price of War.
“The global economy has lost momentum in the wake of russia's unprovoked, unjustifiable and illegal aggression against Ukraine. GDP growth has stalled in many economies, and, judging by the data on the state of the economy, the slowdown will be long-lasting,” OECD Secretary-General Mathias Cormann said.
In addition to the energy crisis caused by the kremlin's gas war against Europe, the rate of growth of wealth around the world is being pressured by record inflation and the Covid-19 lockdown in China. But above everything – the war.
Without it, in 2023 the volume of the world economy would be 2% larger than in the forecast published on Monday. In terms of money, this is a gigantic figure – $2.8 trillion, about one and a half times more than russia's GDP.
Among the world's 20 leading economies, russia will experience the most significant decline next year – 4.5% of GDP.
Along with russia, the OECD predicts a decrease in Germany's GDP in 2023 (minus 0.7%), which is the largest economy in Europe, the main buyer of russian gas and the leading exporter. The reason for this will be the lack of gas, most of which Berlin used to buy from Gazprom.
Other economies are expected to grow, most notably Turkey, India, China and Saudi Arabia, which have benefited from the energy and sanctions war between russia and the West.
The forecasts for the next year for the two leading economies of the West – the USA and the Eurozone – have deteriorated. Currently, the OECD expects barely noticeable GDP growth of half a percent in America and 0.3% in the 19 countries of the Eurozone.
However, even these gloomy forecasts may turn out to be too optimistic, as they are built on bold assumptions.
Firstly, the economists did not take into account in their outlooks the possible escalation of russia's war against Ukraine or the expansion of aggression to other territories. Secondly, they assumed that Covid-19 is in the past, and there will be no new waves or lockdowns this winter.
And thirdly, they included in the calculations a gradual easing of the energy crisis in Europe. This is the biggest risk, OECD experts accept. In their forecasts they took into account the planned voluntary reduction of gas consumption in the EU, and new contracts for the purchase of gas from suppliers alternative to russian ones. The cards may be confused, though, by an excessively cold winter or disruption in supplies from other countries.
The European Commission has prepared a plan to get through the winter without russian gas, but the 27 countries of the Union have not yet agreed to it. Energy ministers will try to reach an agreement this week. If successful, the plan will be approved next week by the leaders of all EU countries at the summit in Prague.