17.06.22 Review

Slowing growth and high global inflation are affecting low-income countries the most, but developed economies are also feeling the hurt, reports by the OECD and the European Investment Bank show

The war in Ukraine caused a sharp rise in energy, metal and food prices, primarily affecting the world’s poor and the developing economies. But amidst soaring inflation developed countries are also experiencing the slowdown of economic activity and falling disposable incomes, painfully felt by their respective populations, the latest global economic outlook by OECD states.   

Real consumption in Europe is falling, the European Investment Bank report says. Accelerating inflation combined with economic slowdown is causing more businesses to carry heavier losses and risk defaulting on their debt. As the economies are slowing down, inflation is forcing national banks to raise interest rates, which could decelerate GDP growth even further. This economic context puts pressure on European politicians, who are beginning to lean in favor of ending the war as soon as possible, even at the expense of concessions to Moscow.