WASHINGTON, April 14 (Xinhua) — The International Monetary Fund (IMF) chief mentioned Thursday that the group will revise down its world progress forecast amid the Russia-Ukraine conflict, the influence of which is able to contribute to downgrades for 143 economies this 12 months.
“To put it merely: we face a disaster on prime of a disaster,” IMF Managing Director Kristalina Georgieva mentioned in a curtain raiser speech forward of the 2022 spring conferences of the IMF and the World Bank scheduled subsequent week.
“In the previous seven weeks, the world has skilled a second main disaster – a conflict on prime of a pandemic. This dangers eroding a lot of the progress we’ve made over the previous two years, climbing again from COVID,” mentioned Georgieva.
In an replace to its World Economic Outlook (WEO) report launched in January, the IMF already lower 2022 world progress forecast by 0.5 proportion level to 4.4 p.c amid Omicron surge, as economies grapple with provide disruptions, increased inflation, file debt and chronic uncertainty.
“Since then, the outlook has deteriorated considerably,” largely due to the conflict and its repercussions,” Georgieva famous.
The IMF chief famous that the financial penalties from the Russia-Ukraine conflict unfold “quick and much,” “hitting hardest the world’s most weak individuals.”
It has pushed up vitality and meals costs and exacerbated inflation, hurting lots of of tens of millions of households who have been already battling decrease incomes and better costs, and threatening to additional enhance inequality, she mentioned.
“As a end result, we might be projecting an extra downgrade in world progress for each 2022 and 2023,” Georgieva mentioned, noting that the influence of the conflict will contribute to forecast downgrades for 143 economies this 12 months – accounting for 86 p.c of world GDP. The IMF will launch its World Economic Outlook subsequent Tuesday, April 19.
Georgieva famous that prospects range tremendously throughout international locations: from catastrophic financial losses in Ukraine, to a extreme contraction in Russia, to international locations going through spillovers from the conflict via commodity, commerce, and monetary channels.
The double crises and the world’s skill to take care of them are additional difficult by one other rising threat: “fragmentation of the world financial system into geopolitical blocs – with totally different commerce and know-how requirements, cost programs, and reserve currencies,” she mentioned.
The fast priorities, in accordance to the IMF chief, are to finish the conflict in Ukraine, confront the pandemic, and deal with inflation and debt. She additionally highlighted efforts to combat local weather change, whereas urging policymakers to embrace digital revolution.
In the face of surging inflation, central banks ought to act decisively, retaining their finger on the heartbeat of the financial system and adjusting coverage appropriately, Georgieva mentioned, including that they need to additionally talk clearly.
She warned that rising and growing economies face the added threat of “potential spillovers” from financial tightening in superior economies – not solely increased borrowing prices but in addition the danger of capital outflows.
To deal with these challenges, international locations needs to be ready to use the complete set of instruments accessible, which ranges from extending debt maturities and utilizing change price flexibility to international change interventions and capital move administration measures, she added.
