The International Monetary Fund (IMF) is once again downgrading its forecast for global economic growth, mainly because of the Russian war of aggression in Ukraine.
The growth forecast for 143 countries, which together represent 86 percent of global economic output, will be lowered in the coming week, said IMF boss Kristalina Georgieva on Thursday.
According to a previously distributed speech manuscript, she cited the high inflation rates, more difficult conditions on the financial markets and the frequent and extensive corona lockdowns in China as further reasons for the weaker expected growth.
The IMF had already lowered its global growth forecast by 0.5 percentage points to 4.4 percent in January as a result of the omicron wave of the corona pandemic.
The new forecast is to be presented on Tuesday at the spring meeting of the IMF and World Bank in Washington.
“War and sanctions could escalate”
Georgieva emphasized that the downgrading of the growth forecast affects countries to very different degrees.
"Catastrophic economic losses" are to be expected for Ukraine, and a "severe slump" for Russia.
Many other countries are exposed to disruptions in trade relations and distortions in the commodity markets because of the war.
Overall, expectations would be lowered for most net importers of food and energy commodities - "in Africa, the Middle East, Asia and Europe," Georgieva said, according to the speech transcript.
For many countries it will now take even longer to return to the growth path from before the corona pandemic.
Higher energy and food prices further fueled inflation, which weakened people's purchasing power "around the world".
“Hundreds of millions of families have struggled with reduced incomes and higher energy and food prices.
The war has made it significantly worse and threatens to further increase inequality,” Georgieva said.
The further economic outlook is "extraordinarily uncertain," said the IMF boss.
“The war and sanctions could escalate.
There could be new Covid variants.
Harvests could fail.” Before the war, Russia and Ukraine provided around 28 percent of global wheat exports, Russia and Belarus 40 percent of the important fertilizer potash.
“Massive setback for economic recovery”
The food supply is therefore a cause for “great concern”.
Georgieva warned that the international community must act now to support the countries affected, especially in Africa and the Middle East.
"The alternative is terrible: more hunger, more poverty and more social unrest - especially in countries that have struggled for years to emerge from instability and conflict."
In addition to the consequences of the war and the pandemic, the global economy still has to cope with a significantly higher inflation rate.
“For the first time in many years, inflation has become a clear and present threat for many countries around the world.
This is a massive setback for global economic recovery,” Georgieva said.
World Bank President David Malpass has also warned of a dramatic deterioration in living conditions in developing countries in view of rising prices.
"The high inflation is an economic and social catastrophe for many poorer countries," he told the "Wirtschaftswoche".
The poorer a country is, the more difficult it is to protect itself against rising prices.
Malpass therefore called for far-reaching debt relief for the poorest countries.
“The war in Ukraine should now lead to a rethink in the rich countries.
We must free poor countries from their crushing debts,” he said.
More expensive raw material imports are currently driving up debt in developing countries.
This will be reinforced by rising interest rates.Keywords: