The economic damage due to the war in Ukraine will contribute to a significant slowdown in global growth in 2022 and add to inflation, according to the IMF.
Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January, the global fund said in its World Economic Outlook report.
"Beyond 2023, global growth is forecast to decline to about 3.3 percent over the medium term. War-induced commodity price increases and broadening price pressures have led to 2022 inflation projections of 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies—1.8 and 2.8 percentage points higher than projected last January," the IMF report noted.
A deep contraction is projected for Russia due to sanctions and European countries’ decisions to scale back energy imports. Fuel and food price rises are already having a global impact, with vulnerable populations—particularly in low-income countries—most affected, IMF said in its report.
Multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change, and end the pandemic are essential, IMF said.
(Writing by Seban Scaria; editing by Brinda Darasha)