IMF Slashes Growth Forecast On 'seismic' Ukraine War

The "seismic" impact of the war in Ukraine is spreading worldwide, causing the IMF on Tuesday to sharply downgrade its 2022 global growth forecast to 3.6 percent.

That slowdown, 0.8 points lower than its previous estimate released in January, comes amid surging prices, shortages and rising debt levels, the IMF said in its latest World Economic Outlook.

The fallout has been felt most acutely in the poorest nations, threatening to erase recent gains as the world had begun to recover from the Covid-19 pandemic, and the risks and uncertainty remain high, the Washington-based lender warned.

China will also feel the effects of the war and the ongoing impact of the Covid-19 pandemic, with growth expected to slow to 4.4 percent.

The IMF says lockdowns on the mainland to defeat renewed coronavirus outbreaks are slowing activity, including in manufacturing hubs, which "could cause new bottlenecks in global supply chains".

For Hong Kong, the IMF forecast growth of 0.5 percent.

"The economic effects of the war are spreading far and wide – like seismic waves that emanate from the epicenter of an earthquake," IMF chief economist Pierre-Olivier Gourinchas said in the report.

Russia began its operation Ukraine in late February, devastating the country's infrastructure and ability to produce grain and other goods, while stiff sanctions on Moscow sent fuel prices higher.

The conflict also sparked a flood of refugees into neighboring countries.

The crisis will be the focus of global finance officials who gather in Washington this week – virtually and in person – for the spring meetings of the International Monetary Fund and World Bank.

The Ukraine crisis hit as the global economy "was on a mending path but had not yet fully recovered from the Covid-19 pandemic," Gourinchas said. (AFP)