The cost to the world, sometimes called “Putin’s price hike” by President Joe Biden, has been enormous. Now, one organization has put a price tag on the disruption. 

Russia’s war in Ukraine will cost the global economy $2.8 trillion in economic output by the end of 2023, the Organization for Economic Co-operation and Development, an international economic and policy forum, said on Monday. That figure could be even higher because of the risk of declining economic activity in several European countries as they attempt to ration their energy supplies during winter. 

“The world continues to pay a high price for Russia’s war of aggression against Ukraine,” OECD’s Secretary General, Mathias Cormann, said. 

Before the war, the OECD expected the world’s economy to grow 4.5% in 2022 and 3.2% in 2023. In its latest, revised forecast, it said the global economy is expected to grow 3% this year and 2.2% next year—meaning the world’s economy is slowing more than initially anticipated—mostly because of the Ukraine war. 

“The global economy has lost momentum this year,” the report said. “After bouncing back strongly from the COVID-19 pandemic, a return to a more normal economic situation appeared to be in prospect prior to Russia’s unprovoked, unjustifiable and illegal war of aggression against Ukraine.” 

The report shows that natural gas prices in Europe have more than tripled over the past year and are now 10-times higher than the average from 2010 to 2019. The OECD projects the eurozone’s economic growth at 0.3% in 2023, down 1.3% from its previous estimate in June. 

“The world, and Europe in particular, is bearing the cost of the war in Ukraine, and many economies face a difficult winter,” the report said. 

The OECD, however, stresses that inflation in most of the world’s largest economies, even before the Ukraine war, was higher than central bank targets. Nonetheless, the invasion exacerbated all the issues stemming from the pandemic, like bottlenecks in supply chains. 

The OECD left the door open to revising its projections in the future, especially if energy supplies are disrupted more. It says the forecasts are “sensitive to a number of key assumptions, including the absence of further waves of COVID-19 infections, no escalation or broadening of the war in Ukraine, and the gradual dissipation of the energy market pressures in Europe.”

The report continued: “Shocks could reduce growth in the European economies by over 1¼ percentage point in 2023, relative to baseline, and raise inflation by over 1½ percentage point. This would push many countries into a full-year recession in 2023.”

Those shocks include natural gas prices potentially rising 50%, which in turn would increase the price for products like fertilizer and oil. 

“Outside Europe, the impact of the shocks would be smaller, but there would still be adverse impacts from higher inflation on real incomes (except in gas-producing economies) and weaker demand from Europe,” the report said. 

The OECD called for the U.S. and Europe to accelerate their transitions from fossil fuels to renewable energy in response to the reduction in fossil fuel supplies from Russia, adding that Russia’s invasion of Ukraine brought a “heightened awareness” of the link between energy policy and security.