War in Ukraine could “fundamentally change” global economic and political fabric-IMF – 03/16/2022 at 02:55

by Andrea Shalal

WASHINGTON, March 16 (Reuters) – Russia’s invasion of Ukraine would affect the global economy by slowing growth and causing inflation to rise, and could fundamentally change the global economic fabric in the long run. , the International Monetary Fund (IMF) said Tuesday.

In addition to causing human suffering and historic refugee flows, the war is driving up energy and food prices, fueling inflation and hurting the value of wages, while disrupting trade, supply chain supply and remittances to neighboring Ukraine, the IMF said in a statement posted on its website. .

The conflict also weighed on business confidence and fueled investor uncertainty which would lower asset prices, tighten financial conditions and could trigger capital outflows from emerging markets, he added.

“The conflict is a major blow to the global economy that will affect growth and drive up prices,” the IMF said.

IMF officials have said they expect to revise down their previous forecast, which called for global economic growth of 4.4% in 2022. In a statement released on Tuesday, they hinted that their forecast for regional growth rates is also likely to be revised downwards.

The IMF will release its revised forecast on April 19.

According to the IMF, food insecurity is likely to worsen in parts of Africa and the Middle East, where countries such as Egypt import 80% of their grain from Russia and Ukraine.

In the long term, according to the report, “war could fundamentally change the global economic and geopolitical fabric, if energy trade changes, if supply chains are reconfigured, if payment networks split and if countries rethink their currency reserves.”

The IMF had forecast deep recessions in Ukraine and Russia, and said Europe could see disruptions in natural gas imports and other larger supply chains. Eastern Europe, which hosts most of the 3 million people who fled Ukraine, will see increased funding costs.

(French version of Camille Raynaud)

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