The economies of the 19 members of the eurozone will grow just 0.3 percent next year, according to the Organization for Economic Co-operation and Development, with Germany facing a recession and the UK posting zero growth.
However, a more severe fuel shortage due to the Russian war in Ukraine could cause European growth to contract another 1.25 percent and drag global growth down 0.5 percent.
The Paris-based OECD forecasts that global growth will reach 3 percent this year and fall to 2.2 percent in 2023, well below the pace forecast before the war in Russia.
Eurozone growth is expected to come in at 3.1 percent this year before slowing to 0.3 percent, largely due to a recession in Germany, where gross domestic product (GDP) fell after growing 1.2 percent in the previous month 2022 will shrink by 0.7 percent next year.
Eurozone inflation is expected to ease slightly to 6.2 percent next year from 8.1 percent in 2022, higher than inflation forecasts for the US and UK.
UK growth is expected to contract from 3.4% this year to zero next year, with UK inflation expected to fall to 5.9% next year from 8.8% this year.
The news comes as sterling fell to record lows against the dollar as investors bet against Chancellor Kwasi Kwarteng’s mini-budget, which included a raft of tax cuts, last week.
US growth is expected to slow to 0.5 percent next year, down from 1.5 percent in 2022. US inflation is expected to be 6.2 percent this year and 3.4 percent in 2023.
Growth in other major eurozone economies was also downgraded.
In Italy, which on Sunday elected its first far-right government since World War II, growth will fall from 3.4 percent this year to 0.4 percent in 2023.
In France, growth will fall from 2.6 percent this year to 0.6 percent in 2023, the OECD predicts.
The Russian economy will shrink another 4.5 percent, according to OECD estimates, after contracting 5.5 percent in 2022.
Real global incomes could be nearly $3 trillion lower than expected a year ago as rising prices and a slowing economy weigh on profits.
“The global economy has lost momentum after Russia’s unprovoked, unjustified and illegal war of aggression against Ukraine,” said OECD Secretary General Mathias Cormann.
“GDP growth has stalled in many economies and economic indicators are pointing to an ongoing slowdown.
“Inflationary pressures, which were already in place when the global economy emerged from the pandemic, have been significantly exacerbated by the war. This has further led to rising energy and food prices, which are now threatening the living standards of people around the world.”
https://www.independent.ie/business/world/oecd-predicts-near-zero-eurozone-growth-in-2023-german-recession-42016794.html For 2023, the OECD forecasts near-zero growth in the eurozone, and Germany a recession