The IMF expects to cut its global growth estimate due to the economic damage caused by Russia’s invasion of Ukraine, Managing Director Kristalina Georgieva said Thursday.
In addition to the damage to Ukraine, the sanctions Western countries have imposed on Moscow in response to the war will lead to a “sharp contraction” of the Russian economy, Georgieva told reporters.
Russia is “moving into a deep recession,” she said, and a debt default is no longer “an improbable event.”
The IMF in January cut the global growth forecast for 2022 to 4.4 percent due to the negative impacts of the Omicron variant of Covid-19, after worldwide GDP rose by 5.9 percent last year. The IMF is due to publish updated forecasts next month.
The Ukraine war and sanctions, which include a US ban on Russian oil imports, are spilling over to the global economy, causing costs for energy and other key commodities like wheat, fertilizers and metals to surge.
That comes “on top of already high inflation, and are causing grave concern in so many places around the world,” Georgieva said.
“We got through a crisis like no other with the pandemic. We are now in an even more shocking territory. The unthinkable happened: We have a war in Europe.”