Just a day after The World Bank slashed its 2022 global growth forecast, blaming Putin, and a month after the IMF cut global growth forecasts, blaming Putin, the Organization for Economic Cooperation and Development (OECD) has done the same.
The OECD is the latest international institution to slash global growth this year and warns of rising inflation. It trimmed 1.5 percentage points from its December global growth outlook to 3% for 2022 while downshifting global growth estimates to 2.8% for 2023.
A view of the 2022 GDP downgrades on a country-by-country basis.
The gloomy outlook also consists of an average inflation rate of around 8.8% across OECD'S 38 member countries, up from 4.5% in December. They indicated high inflation is a "hefty price" to pay for the war in Ukraine.
"Countries worldwide are being hit by higher commodity prices, which add to inflationary pressures and curb real incomes and spending, dampening the recovery," OECD Secretary-General Mathias Cormann said during the outlook presentation on Wednesday.
Cormann then blamed Putin: "This slowdown is directly attributable to Russia's unprovoked and unjustifiable war of aggression, which is causing lower real incomes, lower growth and fewer job opportunities worldwide."
The Paris-based organization's forecast echoes the same downgrades of growth and high inflation, blaming Putin's war in Ukraine, made by the World Bank on Tuesday and IMF in mid-April.
On Tuesday, the World Bank slashed its 2022 global growth forecast to +2.9% (1.2 percentage points below January's forecast) and blamed Putin for ongoing inflation woes. The IMF revised its projection for global growth downwards to 3.6%, a steep falloff from 6.1% last year and from the 4.4% growth it had expected for 2022 in January (and also warned about soaring inflation).
We pointed out the continued degradation of global growth forecasts is a recipe for stagflation.
The OECD also warned: "High inflation is eroding household incomes and spending, hitting vulnerable households particularly hard. The risk of a serious food crisis remains acute for the world's poorest economies because of the high risk of supply shortages and elevated costs."
Supply shocks and high food inflation have already resulted in social instability in multiple emerging market countries.
And other OECD heads blamed Putin. Still, they refused to admit central banks and governments flooding economies with trillions of dollars during the virus pandemic resulted in a sugar high, coupled with the highest inflation in decades.
"The Outlook is sobering, and the world is already paying the price for Russia's aggression," Chief Economist Laurence Boone said. "The choices made by policymakers and citizens will be crucial to determining how high that price will be and how the burden will be shared. Famine is not a price the world should pay."
Scapegoating Putin appears to be the play for OECD countries. Their respective central banks are frantically raising interest rates from record low levels to combat inflation, hoping to fight off the possible emergence of stagflation.
Even if a global recession is averted, inflation will still be above trend through the end of this year and into the next. Then who will IMF, World Bank, and OECD blame for slumping economic growth and elevated inflation? Of course, don't blame the reckless central banks for printing too much money during the pandemic...