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Global economic growth is still to be expected. FORECASTS



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The war in Ukraine and the unprecedented sanctions imposed on Russia have triggered a decline in international trade and soared food and energy prices, and as a result, the International Monetary Fund says its global growth forecasts show significant declines. reports Reuters, quoted by Digi24.

Forecasts had been lowered since January for the US, China and the global economy as a result of pandemic risks, rising inflation and disruptions in supply chains.

At that time, the IMF forecast a 4.4% increase for this year, a decrease of 0.5% compared to previous forecasts.

IMF Managing Director Kristalina Georgieva says sanctions against Russia have led to a sharp downturn in Russia’s economy, which is now facing a deep recession this year.

She also said that a scenario in which Russia enters into insolvency is no longer “unlikely” at this time,

Georgieva also stated that the IMF has no program or political relations with Russia at this time and that the Moscow institution’s office is no longer functioning. However, there is no discussion about Russia’s withdrawal from the IMF at this time.

However, Georgieva added that it is “very, very, very unlikely” that Russia will be able to find a central bank that will change its IMF Special Drawing Rights into foreign currency.

In a separate interview with CNBC, Georgieva also said that she still expects a “positive trajectory” for the global economy, but that the duration of the war will play a crucial role in economic growth and the future of multilateral cooperation.

Russia’s economy will shrink by at least 15% this year, according to an assessment by the Institute for International Finance (IIF), quoted by the BBC.

Prior to the Russian invasion of Ukraine and the imposition of international sanctions, IIF had predicted a 3% increase in the Russian economy in 2022, but now “the drastic and unprecedented deterioration of financial conditions shows that a deep recession is coming.”

Experts have warned that the downturn in Russia’s economy could be even tougher if widespread Western boycotts of Russia’s energy imports follow.

Such a move would “drastically affect Russia’s ability to import more goods and services, which would further deepen the recession,” IIF experts say.