|
|
Plagued by the Omicron variant and now the Ukraine War, the world economy is unlikely to grow 4.4 percent this year as the International Monetary Fund (IMF) had forecast in January, IMF managing director Kristalina Georgieva said in a 10 March press briefing.
The previous forecast had been reduced from the IMF’s prediction last fall of a 4.9-percent global GDP expansion this year.
“We just got through a crisis like no other with the [COVID virus] and we are now in an even more shocking territory,” she said.
“The unthinkable has happened,” she added. “We have a war in Europe.”
The greatest danger to the world’s economy comes from higher commodity prices, especially as the world abandons Russian oil and gas, which are likely to erode consumer spending, weaken financial conditions, and darken business confidence, Georgieva said.
“Surging prices for energy and other commodities – corn, metals, inputs for fertilizers, semiconductors – are coming, in many countries, on top of already high inflation and are causing grave concern in so many places around the world,” she said.
The IMF has approved $1.4 billion in emergency funding for Ukraine. The war has already destroyed $100 billion of Ukraine’s assets, the country’s chief economic advisor announced on 10 March, according to The New York Times.
Sanctions make it unlikely that Russia will have access to its emergency cash reserves, she noted.
The IMF has halted operations in Russia but has not considered ending the country’s membership, Georgieva said.
TREND FORECAST: As we have noted in other articles in this issue, economic indicators point to Dragflation, one of our Top 2022 Trends, in the U.S. and global economies, with GDPs shrinking as prices continue to rise for scarce goods and materials.