Russia’s invasion of Ukraine will shave around one percentage point off of global economic growth this year, reveals new forecasts by the group of rich nations.
Disruption to flows of Russian and Ukrainian commodities as a result of the conflict will deliver a sharp blow to the Eurozone economy, according to the Organisation of Economic Co-operation and Development (OECD).
The Continent is heavily reliant on Russia for gas supplies, meaning economic activity could be curbed in the bloc if flows are scuppered.
Oil and gas prices have whipsawed since the outbreak of the war, intensifying uncertainty in the European business environment.
The UK, meanwhile, sources most of its energy outside of Russia. However, prices are set in international markets, meaning rising energy costs will still crimp growth by weighing on living standards and spending.
The US will grow 0.9 percentage points slower than first thought.
Governments should launch temporary and targeted policies to support households’ incomes, the OECD said..
Some analysts expect Chancellor Rishi Sunak to announce such measures to help Brits through a worsening cost of living crunch at the spring statement next Wednesday.
Central banks should also be prepared to soothe financial market functioning if the conflicts lead to bouts of volatility, the OECD added.