“The war adds to the series of supply shocks that have struck the global economy in recent years. The war has exacerbated inflation that already had been rising in many countries because of imbalances in supply and demand linked to the coronavirus pandemic, with the latest lockdowns in China likely to cause new bottlenecks in global supply chains. The war, which Russia has described as a “ special military operation“, has caused a humanitarian crisis in Eastern Europe, displacing about five million Ukrainians to neighbouring countries, the IMF said. Spillovers from higher energy prices, a loss of confidence, and financial market turmoil would cut another two percentage points off of global growth forecasts, Gourinchas said. The IMF has estimated Ukraine’s GDP will collapse by 35 percent this year, while Russia’s output will shrink by 8.5 percent in 2022.īut IMF Chief Economist Pierre-Olivier Gourinchas told a news briefing a tightening of sanctions against Russia to include restrictions on energy exports could double Russia’s GDP decline to 17 percent by 2023. “What has Russia’s invasion of Ukraine cost? A crisis on top of a crisis with devastating human costs and a massive setback for the global economy,” IMF Managing Director Kristalina told a food security panel on Tuesday. Reduced supplies of oil, gas and metals produced by Russia, and wheat and corn – produced by both Russia and Ukraine – drove up prices sharply in Europe, the Caucasus and Central Asia, the Middle East and North Africa, and sub-Saharan Africa, but was hurting lower-income households around the world.ĭowngrading its forecasts for the second time this year, the global crisis lender said it now projected global growth of 3.6 percent in both 20, a drop of 0.8 and 0.2 percentage point, respectively, from its January forecast because of the war’s direct effects on Russia and Ukraine and global spillovers. Rising prices for food, energy and other goods could trigger social unrest, particularly in vulnerable developing countries, the IMF said. The IMF said other risks include a sharper-than-expected deceleration in China prompted by a flare-up of COVID-19 lockdowns. The war is expected to further increase inflation, the IMF said on Tuesday in its latest World Economic Outlook, warning a further tightening of Western sanctions on Russia to target energy exports would cause another major drop in global output. The International Monetary Fund slashed its forecast for global economic growth by nearly a full percentage point citing Russia’s war in Ukraine, and warned inflation was now a “clear and present danger” for many countries.
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