Global economic growth will drag for the rest of this year and slow further in 2023, according to the Organization for Economic Cooperation and Development, a Paris-based international organization.
The OECD lists Russia's invasion of Ukraine and China's socioeconomic policies as among the major causes for the slowdown.
"The war, the burden of high energy and food prices, as well as zero-COVID-19 policies from China mean that growth will be lower and inflation will be higher and more persistent," OECD Secretary-General Mathias Cormann told reporters Monday in Paris as the organization's interim outlook was released.
The report acknowledged that economic activities were seeing a boost as COVID-19 concerns eased worldwide but stated that "global growth is projected to remain subdued in the second half of 2022, before slowing further in 2023 to an annual growth of just 2.2%."
A key factor slowing global growth is governments' tightening of monetary policy, driven by the greater-than-expected overshoot of inflation targets, OECD said.
Inflationary pressures are expanding beyond food and energy sectors "almost everywhere," the report said. Higher prices can be traced to businesses passing down higher energy, transportation and labor costs to consumers, it said.
Broader inflationary pressures were already evident in the United States earlier in the year; those pressures are now being felt in the eurozone, the report said. It also predicted that the United States would see more progress in reigning in inflation than the eurozone or Britain because Washington was early in tightening monetary policies.
Another factor that leads to inflation is the labor shortage and subsequent rise in wages, which in turn leads to increased purchasing power, the OECD report said. It noted that unemployment rates are "at or close to 20-year lows in many countries."
COVID, debt contribute to China's slowdown
The report described inflation in China as "low and stable" but cited strict lockdowns associated with China's zero-COVID policy, shutdowns, high corporate debt and property market weakness as among factors that are slowing China's growth to just 3.2% in 2022. This figure marks the lowest growth rate in China since the 1970s, except in 2020, when the COVID-19 pandemic emerged.
Earlier, a report published by Bloomberg said "weak consumer demand" was why overall price pressures have largely been kept in check in China, while noting there have been sharp increases in key consumer commodities such as pork.
OECD's forecast of a subdued growth outlook for China comes on the heels of a report released by the Asian Development Bank last week that said that for the first time in more than 30 years, emerging economies are growing faster than China.
Lauren Dudley, a research analyst at the Rhodium Group, which focuses on economic data analytics and policy implications, told VOA in a written interview on Monday, "While the eventual easing of China's zero-COVID policy will bring some relief, China is unlikely to return to [the] level of growth seen before the pandemic."
Ripple effects of Russian attacks
Meanwhile, nowhere is Russia's war against Ukraine felt more acutely than in Europe.
The OECD report warned that the effects of energy shortages could push "many European countries into a recession next year. Yet some leaders in Europe are vowing to continue walking away from energy dependence on Russia.
Earlier this month, German Foreign Minister Annalena Baerbock told a business forum that Germany was determined to craft a new energy policy.
"Looking to the future, we have to be clear that gas from Russia did not actually ever come cheap. At times, the price might have been low. But what generated this low price were blind dependencies or infrastructure swaps which in fact posed a security risk," Baerbock said.
"We paid for every cubic meter of Russian gas twofold and threefold with our national security," she said. "… That is why there is no going back."