(22 April 2022 – Global) The war in Ukraine will severely stagnate the global COVID-19 recovery according to the International Monetary Fund (IMF).
The global economic outlook has “worsened significantly” since January as a direct result of Russia’s invasion of Ukraine and ensuing sanctions by NATO countries according to the latest assessment of the world economy released by the IMF. The organisation warned of potential new global supply chain disruptions due to the strict Chinese COVID lockdowns in Shanghai and warned higher inflation will lead to hawkish monetary policy with rising rates slowing growth.
The IMF projected global growth of 3.6 percent in 2022 and 2023, a decline of 0.8 and 0.2 percent, respectively, from its January forecast.
“Overall risks to economic prospects have risen sharply and policy trade-offs have become ever more challenging. In the matter of a few weeks, the world has yet again experienced a major, transformative shock. Just as a durable recovery from the pandemic-induced global economic collapse appeared in sight, the war has created the very real prospect that a large part of the recent gains will be erased” commented IMF Economic Counsellor Pierre-Olivier Gourinchas.
“There is a rising risk that inflation expectations become de-anchored, prompting a more aggressive tightening response from central banks. In emerging market and developing economies, increases in food and fuel prices could significantly increase the risk of social unrest”