The war in Ukraine is causing an economic blow that is being felt across most of the world. Therefore, the International Monetary Fund (IMF) is forced to lower forecasts for economic growth in 143 countries, accounting for 86 percent of the world economy.
Global growth is expected to slow this year and next, IMF chief Kristalina Georgieva said in a speech in Washington.
Next week, the IMF will again present new economic estimates. It is usual for the fund’s boss to lift a corner of the veil the week before. She points out that the war is not hitting all economies equally. The worst blow will, of course, fall on Ukraine itself, but Russia, which international sanctions have heavily isolated, is also likely to experience “severe contraction”. In other countries, it is mainly the disruptions of supply chains and additional scarcity in the raw materials markets that cause the most pain. As a result, prices have risen sharply everywhere.
“We are facing a crisis on top of a crisis: pandemic and war,” Georgieva warns. Moreover, for the first time in years, she said that high inflation is again a “clear and present danger” for many countries. “This is a huge setback for the global recovery.” Moreover, the Bulgarian indicates that inflation is likely to remain high for longer than the fund previously thought possible.
All over the world, households will feel the price increases in their wallets. In Africa, for example, a larger part of the population may experience hunger. The fact that the forecasts are not more gloomy everywhere is due to the increased prices of, for example, oil, gas and metals. Countries that export these commodities can benefit from this price increase. However, the picture there is also very uncertain.
According to Georgieva, it is clear what needs to be done. First of all, the struggle in Ukraine must be ended, she emphasizes. In addition, central banks must curb inflation. This probably means that interest rates have to go up, but Georgieva is not saying that in so many words. The IMF chief insists that central bankers “must act decisively”. In addition, the corona pandemic must be further combated, as new virus variants are still lurking. Finally, Georgieva points to the high debt levels in many countries. She also underlines the need for a good approach to climate change.