Ukraine Invasion Weighs Heavily On Global Economy
Russia’s invasion of Ukraine is a major negative shock that continues to weigh on global growth, says the Organization for Economic Co-operation and Development (OECD). Its latest forecast shows the global economy is now projected to grow well below the level that was expected before the war. Growth this year is expected to come in at 3.1 per cent, slowing to 2.2 per cent in 2023, before edging back up to 2.7 per cent in 2024. “Persistent inflation, high energy prices, weak real household income growth, falling confidence, and tighter financial conditions are all expected to curtail growth,” the OECD says. “Higher interest rates, while necessary to moderate inflation, will increase financial challenges for both households and corporate borrowers.” These forces are exacerbated by the effects of the war in Ukraine, which “continues to spur inflationary pressures, sapping confidence and household purchasing power and increasing risks worldwide,” it says. For Canada, real GDP growth is projected to slow from 3.2 per cent this year to one per cent in 2023, before edging up to 1.3 per cent in 2024. At the same time, it says inflation is expected to remain high over the next year or so, coming in at more than nine per cent this year, before easing to 6.6 per cent in 2023 and 5.1 per cent in 2024.