Not yet recovered from the pandemic, the world economy might see its growth cut by more than one point and its inflation increase by 2.5 points over one year if the effects of the war in Ukraine prove to be lasting, warns the OECD.
“The world seems to be emerging from the shock of the Covid-19 pandemic, which lasted two years, only to be hit by a brutal and devastating war in Europe,” said the institution’s chief economist Laurence Boone on Thursday. , during a press conference.
Russia’s invasion of Ukraine has caused a spike in the prices of raw materials, gas, oil, copper, and aluminum, as well as many food prices, which threatens economic activity and the ability of many States to feed their people.
“The role of Russia and Ukraine in the world economy is weak”, concedes the Organization for Economic Cooperation and Development in a report published Thursday, quantifying this weight at 2% of world GDP, just like the share of these two states in world trade.
But these two countries have a “significant influence on the world economy” in view of their weight in many raw materials: they represent 30% of world wheat exports, 20% for corn, mineral fertilizers and natural gas, and 11% for oil, estimates the institution which brings together all the developed countries.
These prices greatly increase the cost of energy for households, that of intermediate consumption for businesses, and food prices such as bread, semolina, oil or sugar.
If the surge in prices continues for a year following the outbreak of the conflict, then global growth might be cut by more than one point and inflation increase by an additional 2.5 points, she calculated.
The International Monetary Fund for its part affirmed on March 10 that it would revise downwards its forecasts for world growth next month.
Inflation record
Inflation has already been persistent for months in most regions of the world: it is at its highest for forty years in the United States, at 7.9% in February, and in the euro zone pulverized its record in February since the European statistics office measured it in 1997 at 5.8%.
European Central Bank (ECB) President Christine Lagarde said on Thursday that “medium-term inflation dynamics will not return to the pattern we saw before the pandemic.”
Europe will be the region most affected by the economic consequences of the Russian invasion, anticipates the OECD, because of its close economic and energy ties with Russia, particularly concerning the States having a border with Moscow or kyiv: the shock might amount to 1.4 points of growth less for the euro zone.
Among the responses recommended in the face of the crisis, the OECD recommends “targeted” budgetary aid to the sectors most affected by the surge in prices, which can be financed in particular by “the taxation of exceptional gains in certain countries”.
Several states have announced measures to deal with rising prices: in France the government presented a “resilience plan” on Wednesday aimed at businesses and households.
Although OECD Secretary-General Mathias Cormann said on Thursday that the economic upheaval “is likely to continue in the future”, the OECD believes that the economic impact of the conflict is “highly uncertain and will depend on the duration of the war and state responses”.
On foodstuffs, it calls on the member countries of the organization to increase their production. It also recommends refraining from any protectionist measure and offering multilateral support for logistics.
Soaring food prices pose a particularly great threat to the ability to feed themselves in many parts of the world.
Exported massively by Moscow and kyiv, wheat is the staple food of many countries: a potential complete cessation of exports from the two capitals would lead to “an increased risk of economic crises in certain countries but also humanitarian disasters with a sharp increase in poverty and hunger”, warns the institution.
Turkey and Egypt import more than 70% of its wheat from the two countries, and Tunisia and Israel more than 50%, according to data provided by the OECD.
This article has been published automatically. Sources: ats / awp / afp