OECD says Ukraine war means governments must help households with rising bills

theguardian.com:

A twin growth and inflation blow to the global economy from the war in Ukraine will require governments to provide help with rising energy bills to hard-pressed consumers, the west’s leading thinktank has said.

The Paris-based Organisation for Economic Cooperation and Development said it had shaved more than a percentage point off its forecast for world output and raised its inflation estimate by 2.5 percentage points as a result of the Russian invasion.

The OECD had previously expected world output to rise by 4.5% this year – but said the war in eastern Europe would have “numerous significant economic implications”.

In its first comprehensive analysis of the crisis, the thinktank noted that while Russia and Ukraine contributed relatively small amounts to global output, they were big producers and exporters of key food items, minerals and energy.

“The war has already resulted in sizeable economic and financial shocks, particularly in commodity markets, with the prices of oil, gas and wheat soaring.”

The OECD – which has 38 developed country members – said the eurozone would be especially hard hit by the economic fallout from the conflict, with growth 1.4 points lower than expected at just under 3%.

With the war raising the cost of energy and food, the thinktank said it was also sharply raising its 2022 inflation forecast to around 7.5%. The OECD had already raised its cost of living projections by around 0.5 points to 5% since its last half-yearly economic outlook was published in December 2021.

“In the near term, many governments will need to cushion the blow of higher energy prices, diversify energy sources and increase efficiency wherever possible”, the OECD said.

“The war has underlined the importance of minimising