The Organisation for Economic Co-operation and Development (OECD) says that inflation is now the single biggest threat facing the global economy but added complications could factor in should the war in Ukraine continue.
The OECD says inflation expectations are now double what they were for 2022, with an average of 9% predicted across OECD countries this year. Chief economist Laurence Boone warns this could have long-term effects for economic performance, saying “Elevated inflation across the globe is eroding households’ real disposable income and living standards, and in turn lowering consumption. Uncertainty is deterring business investment and threatening to curb supply for years to come.
As it lowered its growth forecast, OECD analysts said the war in Russia could also have real implications on economic growth forecasts moving forward and could push some economies closer to recession. “The major influence of Russia and Ukraine on the global economy is via their role as important suppliers in a number of commodity markets. Together they account for about 30% of global exports of wheat, 15% for corn, 20% for mineral fertilisers and natural gas, and 11% for oil,” they said.
“A particular concern is that a cessation of wheat exports from Russia and Ukraine could result in serious food shortages in many developing economies. There would be an acute risk not only of economic crises in some countries but also humanitarian disasters, with a sharp increase in poverty and hunger.”
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