IMF: Russian invasion of Ukraine hits global economic growth

the war in Ukraine stop the world economic growthwarned Kristalina GeorgievCEO of International Monetary Fund (IMF)who argued that the context is one of pressure on food prices and deterioration of consumer and business confidence.

With this scenario, the IMF will cut its global growth forecast due to the war, announced Georgieva, who also argued that a Russian default 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,” she stated.

“Next month (during the spring meetings) we will have a downward revision of our global growth projections,” he added.

In January, the IMF forecast was taken to 4.4% expansion in 2022 compared to 4.9% in October and almost 5.9% expected last year for the world economies as a whole.

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,” the world is now going through “even more shocking territory,” Georgieva said. “The unthinkable occurs: we have a war in Europe,” she summed up.

Regarding the impact on the Russian economy, the head of the Fund stressed that the sanctions imposed by the allied countries, “unprecedented”, lead to “a brutal contraction of the Russian economy and 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 most integrated into the Ukrainian and Russian economies,” he explained, mentioning the nations of Central Asia, Moldova or 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 world 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 US $ 1,400 million.

It is a small figure compared to the damage caused by the conflict, estimated by the Ukrainian authorities at US $ 100,000 million.

world impact

Around the world, the impact of war is palpable. The population suffers from rising prices of raw materials and energy. That affects confidence.

This price spike also occurs when inflation was already high due to strong demand and supply problems caused by the pandemic.

That raises “serious concerns in many parts of the world,” Georgieva noted. “It is particularly dangerous for families living in poverty, for whom food and fuel represent the largest part of their expenses.”

“When we look at the real economy, we clearly see a contraction in trade and an erosion of consumer confidence and purchasing power,” he added.