IMF to Downgrade Global Economic Growth Forecast Considering Impact of Sanctions on Russia

Kristalina Georgieva, IMF Managing Director
[Photo by Reuters]

[Asia Economy Reporter Jeong Hyunjin] As Russia's airstrikes on Ukraine continue for more than two weeks, the International Monetary Fund (IMF) announced on the 10th (local time) that it plans to revise downward its economic growth forecast, considering the negative impact of international sanctions on Russia on the global economy.

According to the New York Times (NYT) and others, IMF Managing Director Kristalina Georgieva told reporters on the day, "We have just experienced a crisis unlike any before due to the pandemic, and now we are facing an even more shocking situation. Something unimaginable has happened. War is ongoing in Europe," she said.

The IMF had projected global economic growth at 4.4% in January. Even then, it had lowered the previous forecast by 0.5 percentage points, taking into account the spread of the COVID-19 Omicron variant, rising inflation, supply chain issues, and the U.S.'s tightening monetary policy.

Managing Director Georgieva assessed that the Ukraine crisis is the greatest threat to the global economy as it has caused a sharp rise in international prices of food and energy amid already high inflation, also affecting global trade. This could reduce consumer spending and burden economic growth. She also pointed out that unprecedentedly strong international sanctions have led to Russia's economic downturn, facing the possibility of a severe recession. She added that the possibility of Russia declaring debt default is no longer an impossible scenario.

Georgieva stated that since the Ukraine crisis, criticism of Russia has spread internationally, and the IMF office in Moscow has suspended operations, but there is no discussion about suspending Russia's IMF membership.