The IMF warns that war and inflation can derail the world economy

The Russian invasion of Ukraine and price tensions may bring

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We'll know in a month or two.

The uncertainty is such that the International Monetary Fund (IMF) has revised its forecasts and, instead of presenting a new scenario, as it always does, has drawn up two.

One, the central one;

the other, the "alternative".

Under normal circumstances, the latter would have been called the "pessimistic" or "downward" scenario.

But the chances of that second option being given are so high that the institution has preferred to take care of itself.

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As the Fund explains in the review, the world economy contracted in the second quarter, something that, with the exception of Covid-19, had not happened since 2009. Its opinion is summed up in one sentence: "A provisional recovery in 2021 has been followed by a series of increasingly grim developments in 2022, as the risks begin to materialise."

Even in the most favorable scenario, curves come.

If Vladimir Putin does not cut off gas to Europe -something he is already doing-, nor do democratic countries tighten sanctions on Moscow, nor does inflation continue unchecked, nor do financial conditions worsen,

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If any of these dangers materialize, the situation will be very bad, with global growth of 2.6% this year and just 2% next year, which means recessions in the US, Germany and France, among other powers.

The problem is that those dangers are already materializing.

Especially the two that would cause the most damage, according to the Fund's models: the cut in Russian gas and inflation.

so far this year, according to the IMF.

It has left half a dozen countries without gas.

And tomorrow it imposes a further reduction in deliveries to Germany, which will barely receive a fifth of the usual volume of gas at this time.

Inflation shows no signs of falling.

Central banks continue to raise rates.

Last week, the ECB did it by half a point;

tomorrow, the Fed will do it again at three-quarters of a point.

And financial conditions are deteriorating.

In the US, house prices are falling in a growing number of urban areas, while globally,

struggling to finance themselves, and the problems are beginning to spread to emerging markets, so that the

, which has caused the collapse of his government, could be the foretaste of others to come.

In Europe, the risk of a repeat of the euro crisis that devastated the EU economy is very present.

Although the IMF values ​​very positively the creation last Thursday by the ECB of a strategy to intervene in the debt markets of countries and try to avoid a repetition of what happened between 2010 and 2014, it knows that, until they are clear details of the implementation of that plan, it will not be possible to know if the danger is averted.

So the alternative scenario is actually the one we already have.

And if it is confirmed, its impact will be enormous.

Even without calculating it,

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The main culprits are the two locomotives of the world economy: the United States and China.

The IMF cuts the forecasts for the first of them by 1.4 points in relation to April, to the point of leaving them at 2.3%.

For 2023, it reduces them even more, to 1%, which suggests that it will be very difficult for that country to avoid a recession, given that such low growth probably will not prevent GDP from falling for two consecutive quarters, which is the traditional traditional academic definition of "recession".

In fact, the president of that country,

, which seems like a declaration of impotence.

The day after tomorrow, the preliminary figure for the US GDP in the second quarter may confirm the seriousness of the slowdown in the world's largest economy.

With China, the decline is brutal.

The Covid-19 lockdowns will see that country only grow 3.3% this year.

It is the lowest growth figure in the entire IMF statistical base, which goes back 42 years, with the sole exception of 2020, when the world's second-largest economy only grew 2.2% due to Covid-19.

It is something unprecedented in the contemporary world, which is summed up in data such as the fact that Spain and Canada will grow more than China this year, and even Great Britain will barely be one tenth below the Asian giant.

Given that China has supplied a third of all economic growth in the world economy since 2005, slowing down its pace of economic activity will have a very considerable impact.

Spain, one of the most affected

With Spain, the Fund's analysis is ambivalent.

On the one hand, it continues to have the highest growth rate of what the institution calls 'advanced economies', with an expansion of 4% of GDP in 2022. But, on the other hand,

in growth of those economies , only behind the United States and Germany.

The Spanish slowdown is also very fast.

In 2023, according to the Fund, it will only grow 2%.

In fact, the report cuts Spain's growth for next year by no less than 40%, a proportion that, once again, is only exceeded by the US and Germany.

The IMF figures for Spain are based on two elements.

On the one hand, growth in the first quarter was considerably worse than expected, although the institution does not believe that this will be repeated.

On the other hand, the slowdown in Spain's main trading partners is hitting the foreign sector.

Of the ten largest clients in Spain, the report includes seven.

And, in that group, it significantly lowers the growth prospects of six (USA, Germany, France, Canada, UK, and China).

Only Italy breaks the trend, with more growth than expected in April, as long as the political crisis in that country does not ruin that situation.

This scenario extends to the whole world.

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Not even the world's great oil exporter, Saudi Arabia, has seen its growth improve.

The two most relevant exceptions are Italy, as mentioned before, Latin America, which is favored by the increase in the price of raw materials, and Russia.

In the latter country, the impact of the sanctions for the invasion of Ukraine will be less than expected, given that they act on Russian imports, and not on exports, which are mainly oil and natural gas.

Thus, the impact of the punitive measures against Moscow would be felt in the long term, because that country is going to see how its technological backwardness is further triggered by not being able to access Western products.

But for now, things are not going to be so catastrophic for Russia.

GDP will fall this year by 6%, according to this estimate.

It is a huge figure, but it improves the 8.5% drop expected in April.

In the case of Ukraine, the situation is indescribable.

Although the IMF has not made public its forecast for that country, the Fund is handling a 45% drop in Ukrainian GDP as a result of the Russian invasion.

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