Global economic outlook in the face of unpredictable variables from the Russia-Ukraine war

The global economic outlook has been “significantly deteriorated” due to the military campaign of Russia into Ukraine and Western sanctions, according to the latest assessment of the world economy published by the International Monetary Fund on April 19.

The war in Ukraine is not the only risk to economic growth: the IMF warns of potential new bottlenecks in global supply chains due to recent blockades in China, noting that inflationary higher has led many countries to tighten monetary policy.

“Overall risks to the economic outlook have risen sharply and policy trade-offs have become more challenging than ever,” IMF Economic Adviser Pierre-Olivier Gourinchas wrote in the opening statement.

“In a few weeks, the world experienced another major, transformative shock. Just as a lasting recovery from the global economic fallout caused by the pandemic is already in sight, the war has created the very real prospect that a large part of the recent gains will be lost. removed,” said Gourinchas.

According to the IMF, the war in Ukraine will hinder the global recovery from COVID-19. The IMF forecasts global growth of 3.6% in 2022 and 2023 – down 0.8 and 0.2% respectively from January forecasts.

The organization forecasts 2.9% growth in the European Union this year, 1.1% lower than the January forecast. US growth for 2022 is forecast at 3.7% , down from 4% in January. According to the IMF, the Russian economy will shrink by 8.5%. The output of China is expected to grow 4.4% this year, down from the 4.8% forecast in January.

The war exacerbated inflationary pressures, threatening the supply of key commodities. Russia is the main supplier of oil and metals, and Russia and Ukraine are also suppliers of wheat and corn, commodities whose prices have risen sharply after the war.

“In emerging markets and developing economies, rising food and fuel prices could significantly increase the risk of social unrest,” the IMF warned.

The IMF also warned that the longer-term humanitarian impact of the Ukraine war could also add to the destabilization as the “flow of Refugees may exacerbate existing social tensions and unrest”.