As Italy wakes up with a new government, a new report entitled “The Price of War” is coming out of the Parisian offices of the OECD, which analyzes the impact of the conflict in Ukraine on the global economy.
Global incomes are projected to be $ 2.8 trillion lower in 2023 than pre-war forecasts. In the US and Europe, GDP growth next year could stop at 0.5% and 0.25% respectively, the forecast for the United Kingdom at 0% is even harder. Food security would also be at risk, a risk exacerbated by extreme climatic events. Russia, on the other hand, according to the OECD, will see its GDP decrease by 4.5%.
Despite a more mitigated inflation (for Italy the OSCE foresees 4% in 2023), with the energy crisis, which is expected to last “”, incomes will continue to erode. The document notes that the war added to inflationary trends already present before the war. Timely energy cuts and blockages of supply chains will be added, causing supply jolts and thus fueling the flare-ups in prices. The report acknowledges that “the proposal for a European cap on the prices paid to low-cost electricity producers (renewables and nuclear) and a possible additional tax on the unexpected profits of fossil fuel producers could provide some additional resources to Countries that currently do not impose such levies, but has not been incorporated into the projections ”.
“The indicators of the business surveys indicate a stagnation of production in many economies,” – the document continues – “while consumer confidence has fallen to surprisingly low levels in most advanced economies”. Faced with this gloomy scenario, the organization is at pains to give indications to governments, whose authority is affected on two irreconcilable fronts according to the liberal economy: inflation and unemployment. Support for families, according to economists, would be a measure to be used with caution, certainly not generously: “Short-term actions to preserve the standard of living must be balanced with the need to avoid further persistent stimulus in a period of high inflation. A careful reassessment of the composition of public spending and taxation would also help preserve investments to improve infrastructure and energy security while rebuilding fiscal buffers ”.
Hence, the price of a war whose end seems more distant than ever is high. A price that will have to be taken into account by the next budget law.
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