The head of the International Monetary Fund warned on Thursday that Russia’s war on Ukraine was weakening economic prospects for most countries in the world and called high inflation a “clear and present danger” to the global economy.
IMF Managing Director Kristalina Georgieva said the aftermath of the Russian invasion is contributing to economic downgrades for 143 countries, though most of them are expected to continue growing. The war has disrupted global energy and grain trade and threatens to cause food shortages in Africa and the Middle East.
Georgieva made her comments in a speech on the eve of next week’s IMF and World Bank spring meetings in Washington.
A surprisingly strong recovery from the 2020 pandemic recession took businesses by surprise, leaving factories, ports and freight stations unable to meet robust customer demand and forcing prices higher.
Chronically high inflation, which forces the world’s central banks to raise interest rates and likely slows economic growth in the process, amounts to “a massive setback to the global recovery,” Georgieva said.
Georgieva also warned of “the fragmentation of the global economy into geopolitical blocs”, with the West imposing far-reaching sanctions on Russia and China expressing support for the Russian autocratic regime of President Vladimir Putin.
“In a world where war in Europe creates hunger in Africa; where a pandemic can circle the globe in days and reverberate for years; where emissions everywhere means rising sea levels almost everywhere – the threat to our collective prosperity from a breakdown in global cooperation cannot be overstated,” Georgieva said.
Before the war, Russia and Ukraine provided 28% of world wheat exports. And Russia and Belarus accounted for 40% of fertilizer potash exports.
“Now,” Georgieva said, “grain and maize prices are skyrocketing, and leaders in Africa and the Middle East tell me that supplies are running out. Food insecurity is a serious concern.
“We must act now with a multilateral initiative to strengthen food security. The alternative is dire: more hunger, more poverty and more social unrest – especially for countries that have struggled to escape fragility and conflict for many years.
Georgieva called on the world to support Ukrainians and noted that the IMF had provided $1.4 billion in emergency financing to help Ukraine meet its immediate spending needs. The IMF is also providing assistance to Ukraine’s neighbours, including Moldova, which has taken in more than 400,000 war refugees.