Increased energy prices are taking a heavy toll on the world economy, which will worsen if EU gas storage facilities run short, the Organization for Economic Cooperation and Development (OECD) warned on Tuesday.
According to its report, the worst energy crisis since the 1970s will trigger a sharp slowdown worldwide, with Europe hit the hardest.
The OECD forecasts that global economic growth will slow from 3.1% this year to 2.2% in 2023, before accelerating to 2.7% in 2024.
“We are not predicting a recession, but we are certainly projecting a period of pronounced weakness,” OECD chief Mathias Cormann was quoted as saying by Reuters.
The 19-country Eurozone economy was projected to grow 3.3% this year then slow to 0.5% in 2023, before recovering to expand by 1.4% in 2024. That is slightly better than in the OECD’s September outlook, when it estimated growth of 3.1% this year and 0.3% in 2023.
The OECD predicts a contraction of 0.3% next year in euro area powerhouse Germany, whose industry-driven economy is highly dependent on energy imports from Russia.
The French economy, which is far less dependent on Russian gas and oil, is expected to grow 0.6% next year. Italy’s growth is projected at 0.2%, which means several quarterly contractions are probable.
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