Stopping war in Ukraine is the only effective measure for global economy – IMF
Pravda Ukraine
The International Monetary Fund (IMF) stresses the increasing risks for the world economy and considers stopping the Russian war against Ukraine the only efficient measure which can improve global perspectives.
Source: updated October macro forecast of WEO: Navigating Global Divergences, published on 10 October
Directors of the IMF agreed that stopping Russia’s war against Ukraine remains the only effective measure which would allow improving global perspectives, IMF stresses.
The IMF left the forecast concerning the increase of the world economy by 3% in 2023 unchanged. However, the index for 2024 was decreased by 0.1 percentage point – to 2.9 %.
The IMF believes that current division of world economy into blocs amid the Russian war in Ukraine and other geopolitical contradictions may increase:
- due to the implementation of additional trade restrictions (specifically on strategic goods trade, such as critically important fossil fuels);
- in the sector of cross-border transfer of capital, technologies and workforce;
- in the sector of international payments.
“Should this happen, the costs for global prosperity will be high,” the IMF stressed.
The IMF described a theoretical scenario which provides for creating two possible blocs – the US-Europe+ (which would act for the withdrawal of Russian troops from Ukraine) and the China-Russia+ bloc.
Escalation of the war in Ukraine may also cause an increase of food prices that remained high even without the war. This will create serious hardships for many low-income countries.
“This, of course, represents a serious risk to the disinflation strategy,” the IMF states.
The suspension of the Black Sea Grain Initiative in July and recent Russian attacks on Ukrainian grain facilities also cause concern in this context.
Background: The IMF has brought Ukraine back into an updated macro forecast. The fund expects the GDP growth by 2% in 2023 and its acceleration to 3.2% in 2024 after a 29.1% drop last year. The Extended Financing Fund (EFF) provides for this.
The IMF predicts the economy will increase by 2.2% in 2023 in Russia and drop to 1.1% in 2024.
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