PARIS - Russia’s war against Ukraine has provoked a massive energy price shock not seen since the 1970s, which is taking a heavy toll on the world economy. Estimated energy expenditures – on oil, natural gas, coal and electricity – have risen sharply this year in OECD countries to around 17% of GDP.

Although Europe has taken steps to replenish its natural gas reserves and curb demand, this winter in the Northern Hemisphere will likely be challenging. Higher gas prices, or outright gas supply disruptions, would entail significantly weaker growth and higher inflation in Europe and the world in 2023 and 2024.

While fiscal policies need to become more targeted and temporary, accelerating investment in the adoption and development of clean energy sources and technologies will be crucial to diversifying energy supplies and ensuring energy security.