PARIS (Reuters), – A Ukraine crisis that has impacted global growth could reduce more than a percent and increase inflation by two and a quarter percentage points, according to the OECD. The OECD recommended on Thursday for government spending increases as a response.

Organisation for Economic Cooperation and Development (OECD) stated that a targeted increase of 0.5% GDP in government spending could help reduce war’s economic effects by about half, without adding significantly to inflation.

The negative economic impact of war on Europe could reach as high as 1.4%, as Europe is heavily dependent upon Russian energy imports. In comparison, it might be 0.9% in the United States, according to an analysis by the OECD.

While Russia and Ukraine account for only 2.2% of global GDP each, they make a significant impact on the energy markets and commodities markets. They are key producers of raw material used in every aspect of everything from car catalytic converters to fertilizers.

The OECD stated that rising commodity and energy prices are putting additional pressure on inflation. However, central banks need to focus on normalizing monetary policy. A slower pace may be necessary in those countries where economic consequences from war have been the most severe.

The statement also stated that the central banks must be ready to step in if financial markets are under severe stress.

Faced with rising energy and food prices, governments offer handouts. Many also have price controls, or cut fees.

The OECD suggested that governments must be cautious about ensuring such measures are targeted and temporary, and recommended some countries could tax windfall income to fund the additional spending.