Published on : Modified :
Washington (AFP) – The International Monetary Fund (IMF) will lower its global growth forecast next month because of the war in Ukraine, its managing director Kristalina Georgieva announced on Thursday, warning that a Russian default was no longer “a unlikely event”.
The IMF and the World Bank will hold their spring meetings virtually the week of April 18.
“To sum up, we have a tragic impact of the war on Ukraine. We have a significant contraction in Russia and we see the likely impact on our outlook for the global economy,” she said during a round table with some journalists.
“We will come next month with a downward revision to our global growth projections,” she added.
While the world economy has not yet recovered from the Covid-19 pandemic, “a crisis like no other”, it is now going through “even more shocking ground”, underlined Ms. Georgieva.
“The unthinkable is happening, we have a war in Europe,” she said.
Regarding the impact on Russia, the Fund’s leader stressed that the sanctions imposed by allied countries “unprecedented” lead to “a sharp contraction of the Russian economy and a deep recession”.
She described the effects in Russia: from the massive depreciation of the currency which drives up inflation, to the plummeting purchasing power and standard of living of a large majority of the Russian population.
“The spillovers to neighboring countries are also significant, especially countries that are more closely integrated with the Ukrainian and Russian economy,” she said, citing Central Asian countries, Moldova, the Baltic countries .
A default by Russia “is no longer an unlikely event”, she continued, while noting that the problem was not the availability of the money but the inability to use it since the country was cut off from the global financial system.
“I’m not going to speculate on what may or may not happen, but just to say that we no longer talk about Russia’s default as an unlikely event,” she said.
She insisted that the Washington institution had no program with Moscow. And she, on the contrary, underlined that the IMF stood ready to help Ukraine further. On Wednesday, the institution had approved aid of 1.4 billion dollars.
© 2022 AFP