IMF director warns of global inflation shock
Africa, the Middle East, Asia and Europe will be affected.
The head of the International Monetary Fund has issued a warning of a global inflation shock which is caused by the war in Ukraine, in addition to the ongoing COVID-19 pandemic which is slowing down economic growth this year and the next.
The IMF managing director, Kristalina Georgieva, said the IMF, a fund based in Washington, will be lowering its global economic growth predictions for the years 2022 and 2023 due to the war in Ukraine, entailing the increase in price of food, energy and other essential commodities around the world.
“We are facing a crisis on top of a crisis,” she said in a speech ahead of next week's meeting, stressing that the world is facing a clear and present danger as a result of high inflation.
The situation, which was already bad from the pandemic, is worsened by the current situation in Europe. High-income countries are experiencing the highest inflation rates in 40 years as worries about oil and gas provisions are on the rise.
Read more: UK inflation jumps to 6.2%, highest since 1992
Ukraine and Russia, which share the Black Sea, are the world's breadbasket: they provide collectively 28% of global wheat exports. Russia and Belarus, in parallel, provide 40% of potash, an important fertilizer. Countries dependent on imports, particularly poor countries, are the first victims of this downfall as grain and corn prices are on an increase.
Read more: The global wheat supply crisis
The war, according to Georgieva, said the war was a “massive setback for the global recovery” from COVID-19, remarking that the pandemic was already far from being over.
Referring to when the IMF cut its global growth prediction to 4.4% in 2022, Georgieva remarked that "the outlook has deteriorated substantially, largely because of the war and its repercussions.
“Inflation, financial tightening and frequent, wide-ranging lockdowns in China – causing new bottlenecks in global supply chains – are also weighing on activity.”
Furthermore, she warned that Africa, the Middle East, Asia and Europe - who are net importers of food and fuel - will feel the crisis the most.