Leading economies sliding into recession as Ukraine war cuts growth, finds OECD

theguardian.com:

The world’s leading economies are sliding into recession as the global energy and inflation crises sparked by Russia’s invasion of Ukraine cuts growth by more than previously forecast, according to the Organisation for Economic Co-operation and Development (OECD).

A heavy dependency on expensive gas for heavy industry and home heating will plunge Germany, Italy and the UK into a long period of recession after global growth was projected by the OECD to slow to 2.2% in 2023 from a forecast in June of 2.8%.

With the global economy needing to grow by about 4% to keep pace with rising populations, the OECD said incomes per head would be lower in many countries.

OECD’s interim chief economist, Álvaro Pereira, said the world was paying a steep price for the Ukraine war and Russia’s decision to restrict access to gas supplies more than tightly than was forecast in June.

He said governments would need to encourage households and businesses to reduce their consumption of gas and oil to help weather a difficult winter.

Pereira also supported the determination of central banks to reduce inflation by raising interest rates.

“We need to reduce demand, there is no doubt about that. And monetary and fiscal authorities need to work hand in hand to achieve it,” he said.

China’s growth rate is expected to drop this year to 3.2% – its lowest since the 1970s – causing a large decrease in trade with neighbours South Korea, Vietnam and Japan, dragging down their capacity to grow.

A recovery in China next year to 4.7% will be weaker than expected, the OECD said, as Beijing wrestles with a property market and banking sector weighed down by huge debts.

However, the Paris-based policy forum was most alarmed by the outlook across Europe, which is most