The International Monetary Fund has warned that the ongoing Russia-Ukraine conflict will have a “severe impact on the global economy”. The statement which was out after a meeting of the Executive Board and chaired by Managing Director Kristalina Georgieva on March 4 said the immediate impacts of the war have been serious and the consequences are being felt. In a statement, the IMF staff noted, “Energy and commodity prices—including wheat and other grains—have surged, adding to inflationary pressures from supply chain disruptions and the rebound from the Covid‑19 pandemic.”
The IMF noted that this steep hike in consumer prices will adversely affect low-income households globally where food and essential commodities form a bulk of the expense. The IMF warned that the desecration of the war is necessary to minimize the damages that have already been caused. They also observed that the strict sanctions that have been slapped on Russia will also have an indirect effect on all economies of scale and magnitude.
On Monday, the bloodbath in the financial markets across the globe did not see any sign of recovery. At the same time, commodity prices saw spikes with crude oil seeing the highest price rise in 13 years.
This statement from the IMF comes after already the IMF had painted a dim outlook for 2022. It had been said that the global growth is expected to moderate from 5.9 in 2021 to 4.4 percent in 2022—half a percentage point lower for 2022.
It further said, “The IMF will continue to assess the evolving situation, and provide timely policy advice, financial support, and technical assistance to our member countries as needed, in close collaboration with our international partners.”
In the coming week, the IMF will consider giving emergency financial aid to Ukraine in wake of the onslaught. Ukraine has already sought a crisis financing of $1.4 billion through the IMF’s Rapid Financing Instrument.
The warning from the IMF comes after the World Bank too earlier this week warned of significant consequences due to the war. In a statement issued on March 1, International Monetary Fund (IMF) Managing Director Kristalina Georgieva and World Bank Group President David Malpass said, “ At the World Bank Group, we are preparing a $3 billion package of support in the coming months, starting with a fast-disbursing budget support operation for at least $350 million that will be submitted to the Board for approval, this week, followed by $200 million in fast-disbursing support for health and education. This the package will include the mobilization of financing from several development partners, and we welcome the already-announced support from many bilateral partners.”