Russia’s invasion of Ukraine will affect the entire global economy by slowing growth and increasing inflation, and could fundamentally reshape the global economic order in the longer term, the Monetary Fund said on Tuesday. international (IMF).

Beyond human suffering and historic refugee flows, war is driving up food and energy prices, fueling inflation and eroding the value of incomes, while disrupting trade, supply chains and remittances to countries neighboring Ukraine, the IMF said in a post on its website. . It is also eroding business confidence and creating uncertainty among investors that will drive down asset prices, tighten financial conditions and could trigger capital outflows from emerging markets, he said.

“The conflict is a blow to the global economy that will hurt growth and raise prices,” the IMF said. IMF officials have already said they expect to lower the Fund’s previous forecast for global economic growth of 4.4% in 2022. In Tuesday’s message, they suggested their regional growth forecast would also be lowered. probably revised downwards.

The IMF is due to release updated forecasts on April 19. Countries directly exposed to trade, tourism and finance would feel growing pressure, the IMF said, citing an increased risk of unrest in some regions, from sub-Saharan Africa and Latin America to the Caucasus and Asia. central.

At the same time, food insecurity was likely to worsen in parts of Africa and the Middle East, where countries like Egypt import 80% of their wheat from Russia and Ukraine. In the longer term, he said, “war could fundamentally alter the global economic and geopolitical order if energy trading changes, supply chains reconfigure, payment networks fragment and countries were rethinking their reserve currency holdings”.

The IMF predicted deep recessions in Ukraine and Russia, and said Europe could see disruptions in natural gas imports and wider supply chain disruptions. Eastern Europe, which absorbed most of the 3 million people who fled Ukraine, would see higher funding costs as a result. The IMF said countries in the Caucasus and Central Asia with close ties to Russia would be hit hardest by its recession and the sanctions imposed since the invasion of Ukraine, curbing trade, remittances, investments and tourism. Moscow calls its actions in Ukraine a “special operation”.

In the Middle East and Africa, deteriorating external financing conditions could spur capital outflows and deepen headwinds to growth for countries with high debt levels and large financing needs, the IMF said. . Rising energy and food prices, reduced tourism and problems accessing international capital markets would threaten countries in sub-Saharan Africa, which imports around 85% of its wheat supplies, a third of which from Russia or Ukraine.

Food and energy prices are the main vector of spillovers in the Western Hemisphere, with high commodity prices likely to significantly accelerate already high inflation rates in Latin America, the Caribbean and in the USA. In Asia, the greatest impact will be felt among oil importers in ASEAN, India and border economies, including some Pacific islands, while new fuel subsidies could mitigate impacts in Japan and Korea, the IMF said.

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