Russia's war on Ukraine will cost $2.8 trillion across the world - and winter energy shortages in Europe could push that figure higher, OECD says
Russia's invasion of Ukraine will cost $2.8 trillion in lower economic output by the end of 2023, the OECD says.
The Paris-based group added that that amount could climb depending on how Europe's energy crisis unfolds.
"We are paying a very hefty price for the war," OECD's chief economist said, per WSJ.
Russia's war on Ukraine will cost the world $2.8 trillion, and that figure could go higher if Europe's energy crisis worsens to the point of rationing over the winter months, according to the Organization for Economic Cooperation and Development.
Since the invasion in February, the conflict has become the worst that's been seen in Europe since World War II, and the ensuing surge in natural gas and power prices have rattled economies and strained global supply chains.
"We are paying a very hefty price for the war," Álvaro Santos Pereira, OECD's acting chief economist, said, per the Wall Street Journal.
The OECD forecasted Monday that the world economy would grow by 3% in 2022, and 2.2% in 2023. That's a revised forecast, down from 4.5% and 3.2% for this and next year, respectively.
In the Eurozone specifically, the OECD's June forecast was a 1.6% growth in 2023. Monday's revision dropped that down to 0.3%.
In Germany, Europe's largest economy, the figure revised from 1.7% growth to a 0.7% contraction.
And all these figures could worsen if a severe winter exacerbates Europe's energy crisis, the Paris-based economic group said. A rise in energy prices would weigh on Europe's economic output so that it would be 1.3% lower in 2023, with the world economy growing at a 1.7% clip.
An energy shortage across Europe could prompt a rationing of supplies is winter is particularly harsh. That risk could be somewhat minimized, the OECD said, if energy consumption was slashed by up to 15%.
And while price caps can help ease short-term pressure on households, Pereira noted, it can worsen consumption measures.
"If you want to save energy, higher prices mean less consumption," he said, per the Journal.
Meanwhile, Germany signed a natural gas deal with the UAE on Sunday, marking another move by a European country to secure additional energy supplies ahead of winter.
"This marks an important milestone in building up an LNG supply infrastructure in Germany and setting up a more diversified gas supply," Germany utility giant RWE said about the agreement.
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