PARIS (Reuters) -- The global economy should avoid a recession next year but the worst energy crisis since the 1970s will trigger a sharp slowdown, with Europe hit hardest, the OECD said, adding that fighting inflation should be policymakers’ top priority.
National outlooks vary widely, although Britain’s economy is set to lag major peers, the Organization for Economic Cooperation and Development said on Tuesday.
It forecast that world economic growth would slow from 3.1% this year - slightly more than the OECD foresaw in its September projections - to 2.2% next year, before accelerating to 2.7% in 2024.
“We are not predicting a recession, but we are certainly projecting a period of pronounced weakness, OECD head Mathias Cormann told a news conference to present the organization’s latest Economic Outlook.
The OECD said the global slowdown was hitting economies unevenly, with Europe bearing the brunt as Russia’s war in Ukraine hits business activity and drives an energy price spike.
It forecast that the 19-country euro zone economy would grow 3.3% this year then slow to 0.5% in 2023 before recovering to expand by 1.4% in 2024. That was slightly better than in the OECD’s September outlook, when it estimated 3.1% growth this year and 0.3% in 2023.
The OECD predicted a contraction of 0.3% next year in regional heavyweight Germany, whose industry-driven economy is highly dependent on Russian energy exports - less dire than the 0.7% slump expected in September.
Even in Europe outlooks diverged, with the French economy, which is far less dependent on Russian gas and oil, expected to grow 0.6% next year. Italy was seen eking out 0.2% growth, which means several quarterly contractions are probable.
Outside the euro zone, the British economy was seen shrinking 0.4% next year as it contends with rising interest rates, surging inflation and weak confidence.