Russia’s war in Ukraine risks “radically changing the world’s economic and geopolitical order” (IMF)

Three weeks after Russia’s invasion of Ukraine began, the effects of the war are already felt around the world. Conflicts not only cause human suffering and the influx of historic refugees, but also push up energy and food prices. In a statement released Tuesday (March 15), the IMF encouraged inflation and squeezed the value of wages, while disrupting trade, supply chains and remittances to countries adjacent to Ukraine. Said that. And it’s not ready to stop.

After energy, inflation hits consumer goods

“A big blow to the world economy”

IMF officials have previously said they expect to revise previous forecasts downwards. To be on the safe side, it decreased to 4.4% in January in 2022, but it was 4.9% in October and nearly 5.9% last year. In a statement released Tuesday, they hinted that growth forecasts for their region are also likely to be revised downwards. However, we will publish the revised forecast on April 19, so we have to wait for detailed figures.

“Conflicts will have a major impact on the global economy, impact growth and push up prices,” he said. The IMF says.

The ECB has already announced on Thursday, March 10 that it will reduce its 2022 growth forecast for the euro area by 0.5 points from 4.2% three months ago to 3.7% today. Regarding the French economy, the Bank of France estimates that the war in Ukraine will affect GDP by 0.5 to 1 point. Economists are currently expecting 3.4% growth in 2022 if the average annual oil price per barrel is $ 93, but only 2.8% if it reaches $ 119. Without the war, growth forecasts would have been raised from 3.6% to 3.9%.

Ukrainian war has already hurt France’s growth

“Famine Hurricane”

Food insecurity can be exacerbated in parts of Africa and the Middle East, according to the IMF. To be on the safe side, before Russia invaded Ukraine, Ukraine was the fourth largest exporter of corn in the world and the third largest exporter of wheat after Russia and the United States. The war has reshuffled all the cards.

Some countries are already reacting by reducing import forecasts or starting to look for other sources. This is especially the case in Egypt, where 90% of wheat is usually shipped from Russia and Ukraine. “Others like Argentina are choosing national food security by deciding to stop exporting.” Soybean oil, one of the world’s leading exporters

“War in Ukraine means hunger in Africa”, IMF Managing Director Cristalina Georgieva lamented and UN Secretary-General Antonio Guterres warned. “Famine Hurricane” In many already vulnerable countries.

War in Ukraine: These “famine hurricanes” and these food riots in a world feared by the United Nations

Risk “Fundamental change” Of economic and geopolitical order

The IMF said in a statement that the war could put pressure on corporate confidence, cause investor uncertainty, lower asset prices, tighten fiscal conditions and cause capital outflows from emerging markets. ..

In the long run, the IMF reports “If energy trade changes, supply chains are restructured, payment networks are disrupted, and countries rethink foreign exchange reserves, war can radically change the world economy and geopolitical order.”

The IMF predicted a serious recession in Ukraine and Russia. Assuming Ukraine’s GDP will shrink by “at least” about 10% in 2022, “Rapid solution” Thanks to conflict and international aid “Substantial”, Nevertheless, according to the initial estimate by the institution “Giant” Uncertainty surrounding these predictions. Based on the history of wars in Lebanon, Iraq, Syria and Yemen, if the conflict stagnates, it could plummet by 25% to 35%. However, Ukraine’s growth rate last year was 3.2%, driven by domestic demand and exports.

And Ukraine was alone against Russia in the world

Fund head emphasized sanctions on the impact on Russia “Unprecedented” Imposed by the Allies “Rapid contraction of the Russian economy” And even “To a serious recession”..

Finally, the IMF said Europe could experience natural gas imports and other larger supply chain disruptions. In Eastern Europe, which has accepted most of the 3 million people who fled Ukraine, funding costs will increase accordingly.

Global Growth: War in Ukraine Stops Post-Covid Rebound Risk

(Using AFP and Reuters)