Ukraine War Continues to Slow Global Growth, New Report Says

Britain, by contrast, will suffer from a lengthy recession, with the economy shrinking by 0.4 percent next year before limping into a shallow recovery in 2024. The country, which the O.E.C.D. forecast to grow 4.4 percent this year, has stumbled badly after months of political upheaval and a sweeping series of unfunded tax cuts in September that caused the British pound to plunge and eventually led to the resignation of Liz Truss as prime minister.

The current government, led by Rishi Sunak, unveiled a much-anticipated budget proposal last week seeking to repair the damage. But rising living costs will continue to weigh on economic growth, the O.E.C.D. said.

Growth in 2023 will be strongly dependent on major Asian emerging market economies, which will account for close to three-quarters of global growth next year, the organization added. China’s economy is likely to expand by 4.6 percent in 2023, following a pandemic-induced slowdown this year that has slashed its growth rate by more than half, while India will grow at a robust 5.7 percent pace.

More pernicious than slowing growth is the stubborn scourge of inflation, which has been driven higher by a surge in energy prices and is likely to continue to squeeze households and businesses for the foreseeable future. But the group said inflation in most of the world’s developed and developing economies would cool slightly next year, to 6.4 percent from a blistering 9.4 percent rate in 2022, the group said.

Efforts by central banks to contain runaway inflation are starting to pay off in some countries, the O.E.C.D. said. In Brazil, where the central bank moved swiftly with a series of rate increases, inflation has started to come down in recent months. In the United States, where the Federal Reserve had unleashed its biggest rate increases in decades, the latest data suggest some progress is being made in the fight against inflation.

Even so, monetary policy should continue to tighten in the countries where inflation remains high and broad-based, the O.E.C.D. said.

As Europe continues to confront a war on its border, policymakers are likely to have a harder time reining in inflation, mainly because governments are making a tremendous pivot away from relatively cheap Russian gas and oil that is likely to take several years to bear out.

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