The IMF will cut its global growth forecast due to the war in Ukraineits CEO, Kristalina Georgieva, announced Thursday, saying a Russian foul is no longer “an unlikely event.”
“To summarize, we have a tragic impact from the war against Ukraine. We have a major contraction in Russia and we see the likely impact on our outlook for the world economy,” he told reporters.
“Next month (during the spring meetings) we will have a downward revision of our global growth projections,” he added.
The IMF and the World Bank will hold their meetings virtually in April. With the world economy still not recovering from the coronavirus pandemic, “a crisis unlike any other,” it is now going through “even more shocking territory,” Georgieva said.
“The unthinkable occurs: we have a war in Europe,” he summarized.
On the impact on the Russian economy, lThe head of the Fund stressed that the sanctions imposed by the allied countries, “unprecedented”, lead to “a brutal contraction of the Russian economy already a deep recession.”
Georgieva described the effects in Russia: currency depreciation fueling inflation or collapse in purchasing power and living standards for a large majority of the population.
“The effects on neighboring countries are equally important, particularly in the countries that are more integrated into the Ukrainian and Russian economies,” he explained, mentioning the countries of Central Asia, Moldova and the Baltic countries.
A Russian default? “I am not going to speculate on what may or may not happen, but just say that we are no longer talking about a Russian payment default as an unlikely event,” she emphasized.
The director of the IMF explained that the problem is not the availability of money, but the inability to use it since the country was isolated from the global financial system.
The IMF has no ongoing credit programs with Moscow. Georgieva maintained that the body is ready to help Ukraine. On Wednesday, the Fund approved an aid of 1,400 million dollars.
With information from AFP
Source: Larepublica
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