The war in Ukraine and the related sanctions that international locations round the world have imposed on Russia will likely trigger a downgrade of the International Monetary Fund’s global financial progress forecast, Kristalina Georgieva, the I.M.F.’s managing director, mentioned on Thursday.
The Ukraine disaster represents one other shock to a world financial system that was simply rising from the coronavirus pandemic, and it has been compounding global provide chain disruptions and inflation headwinds which were trigger for concern. The full influence on the world financial system stays unsure, I.M.F. officers mentioned, and will depend upon the final result of the war and the way lengthy sanctions stay.
“We just got through a crisis like no other with the pandemic and we are now in an even more shocking territory,” Ms. Georgieva instructed reporters. “The unthinkable happened — we have a war in Europe.”
In January, the I.M.F. reduced its estimated global growth rate for 2022 to 4.4 p.c, from the 4.9 percent it had projected final 12 months, because of slowdowns in the United States and China.
Ms. Georgieva mentioned that the most important menace to the world financial system was higher inflation coming from increased commodity costs as international locations shift consumption away from Russian oil and fuel. This, in flip, might eat into shopper spending. Worsening monetary situations and enterprise confidence even have the potential to weigh on progress.
“The surging prices for energy and other commodities — corn, metals, inputs for fertilizers, semiconductors — they are coming, in many countries, on top of already high inflation and are causing grave concern in so many places around the world,” Ms. Georgieva mentioned.
The I.M.F. is working to develop a plan to offer extra help for Ukraine’s eventual rebuilding effort, however mentioned that it was too quickly to know the extent of the nation’s wants. This week, the fund’s government board approved $1.4 billion in emergency financing.
Ukraine’s prime financial adviser mentioned earlier on Thursday that Russia had already destroyed $100 billion worth of the country’s assets.
The fund can also be assessing the influence of the sanctions on the financial system of Russia. Much of its monetary sector and its central financial institution has been blacklisted.
“The Russian economy is contracting and the recession in Russia is going to be deep,” Ms. Georgieva mentioned. “That is already clear.”
She mentioned it was unlikely that Russia would be capable to entry its emergency forex reserves due to sanctions.
The I.M.F. has halted operations and packages in Russia. Ms. Georgieva mentioned that there had been no discussions about ending Russia’s membership in the fund.