Paying the Price of War

Global Economic outlook

According to the OECD Economic Outlook report from September 2022, the global economic outlook has slowed down more than anticipated due to the war negative impact, the generalised tightening of monetary policy, driven by the greater-than-expected inflation targets and the China’s zero COVID-19 policy imposing lockdowns in its economy. The OECD is in favour of further policy rate increases in most of the countries to ensure that inflation pressures are reduced durably.

Main takeaways of the report:

  • The world economy is slowing down more than anticipated: global growth is projected to remain subdued in the second half of 2022 leading to an annual growth of 2% before slowing further in 2023 to an annual growth of just 2.2% below the pace foreseen prior to the war.

  • Inflation has become more widespread: More than half of the items in the price index show inflation above 4% in the United Kingdom, the United States and the euro area.

  • Inflation will ease but will remain at high levels: OECD estimates that headline inflation will peak in the current quarter in most major economies, and to decline in the fourth quarter and throughout 2023 in most G20 countries. Even so, annual inflation in 2023 will remain well above central bank targets almost everywhere

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