The war in Ukraine & the associated sanctions that nations around the world have imposed on Russia are likely to cause a downgrade of the International Monetary Fund’s global economic growth forecast, Kristalina Georgieva, the I.M.F.’s managing director, stated on Thursday.
The Ukraine crisis is another blow to a global economy that was just stepping up from the COVID-19 pandemic, & it has been compounding global supply chain disruptions as well as inflation headwinds that have been reason for concern. The full impact on the global economy still remains uncertain, I.M.F. officials said, and will depend on the war’s outcome and how long sanctions will remain.
“We just went from a crisis like no other with the pandemic, & we are currently in an even more shocking territory,” Ms. Georgieva said. “The unthinkable happened — we are having a war in Europe.”
In January, the I.M.F. has reduced its estimated global growth rate for 2022 to 4.4 per cent, from the 4.9 per cent it had projected last year due to slowdowns in the United States & China.
Ms. Georgieva stated that the most important threat to the world economy was greater inflation coming from higher commodity prices as nations has shifted consumption away from Russian oil & gas. This, in turn, can also eat into consumer spending. Continuously worsening financial conditions & business confidence also have the potential to weigh on the growth.
“The soaring prices for energy as well as other commodities — corn, metals, inputs for fertilizers, semiconductors — they are coming, in many countries, on top of already high inflation and are causing grave concern in so many places around the world,” Ms. Georgieva said.