A view of the damage in the Ukrainian city of Mariupol under the control of the Russian army and pro-Russian separatists, on April 17, 2022.
Anadolu Agency | Anadolu Agency | fake images
The International Monetary Fund cut its global growth projections for 2022 and 2023 on Tuesday, saying the economic impact of Russia’s unprovoked invasion of Ukraine it will “spread far and wide”.
The Washington-based institution now projects a GDP rate of 3.6% for the global economy this year and for 2023. This represents a drop of 0.8 and 0.2 percentage points, respectively, from its forecasts published in January. .
“The global economic outlook has been seriously affected, largely due to the Russian invasion of Ukraine,” Pierre-Olivier Gourinchas, an IMF economic adviser, said in a blog post on Tuesday, marking the release of the latest Outlook report. the IMF world economy.
Russia launched its invasion of Ukraine on February 24, and officials including NATO’s Jens Stoltenberg have signaled that Moscow hopes to gain control of its neighbor as a whole.
“The effects of the war will ripple far and wide, increasing price pressures and exacerbating major political challenges,” Gourinchas said on his blog.
The The World Bank also cut its expectations for global growth earlier this week, now estimating a growth rate of 3.2% from 4.1% for 2022.
The United States, Canada, the United Kingdom, and the European Union have imposed several rounds of sanctions targeting Russian banks, oligarchs, and energy.
The IMF said that these sanctions will have “a severe impact on the Russian economy”, which estimated that the country’s GDP will fall by 8.5% this year and 2.3% in 2023.
However, the Fund has forecast an even gloomier assessment for the Ukrainian economy.
“By 2022, the Ukrainian economy is expected to contract by 35%,” the IMF said in its latest economic assessment, adding that a more precise analysis on the economic impact was “impossible to obtain.”
“Even if the war were to end soon, the loss of life, the destruction of physical capital and the flight of citizens will severely impede economic activity for many years,” the institution said.
More broadly, Russia’s decision to invade Ukraine has intensified the supply-side shocks to the world economy, while at the same time creating new challenges.
“Russia is a major supplier of oil, gas and metals and, along with Ukraine, of wheat and corn. Reduced supplies of these commodities have pushed their prices up sharply,” the Fund said on Tuesday.
This is expected to hurt low-income households around the world and cause higher inflation for longer than anticipated. The IMF estimates that the inflation rate will reach 7.7% in the United States this year and 5.3% in the euro zone.
“The risk is increasing that inflation expectations move away from the central bank’s inflation targets, prompting a more aggressive tightening response from policymakers,” the Fund said.
However, this monetary tightening could accelerate if inflation remains high.
The IMF’s latest economic outlook also points to concerns about the 5 million Ukrainian refugees who have sought support from neighboring countries, such as Poland, Romania and Moldova, and the resulting economic pressures on these nations to support them.