IMF to lower global growth forecasts due to Ukraine war and Covid

theguardian.com:

The head of the International Monetary Fund has warned that the global inflationary shock caused by Russia’s war in Ukraine and the ongoing Covid pandemic will lead to lower economic growth this year and next.

Kristalina Georgieva, the IMF’s managing director, said the Washington-based fund would downgrade its global growth forecasts for 2022 and 2023 as a result of Vladimir Putin’s invasion pushing up the price of food, energy and other commodities around the world this year.

“We are facing a crisis on top of a crisis,” she said in a speech before the IMF’s spring meeting next week.

Saying that the world faced a “clear and present danger” from high inflation for the first time in many years, she added: “We will be projecting a further downgrade in global growth for both 2022 and 2023.”

Russia’s invasion of Ukraine in late February sent shockwaves throughout the global economy, fuelling the highest rates of inflation in four decades in advanced economies amid concerns over oil and gas supplies.

The two countries together provide 28% of global wheat exports, while Russia and Belarus supply 40% of potash, a crucial fertiliser. Grain and corn prices have soared as a consequence of the conflict, stoking concerns over the impact for poorer countries dependent on imports.

Georgieva said the war was a “massive setback for the global recovery” from Covid, while warning the pandemic was far from over and continued to be a major risk for international trade and prosperity.

In January, the IMF cut its global growth forecast to 4.4% for 2022 as the Omicron variant weighed on activity across the world, but the head of the fund said this would be scaled back further in new forecasts to be published in next week’s World Economic Outlook.

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