World Economy Downgraded Due to War in Ukraine/COVID Variants
As the United Nations reports - over 5 million refugees have now fled Ukraine. Russia’s invasion and subsequent humanitarian crisis have helped sink global growth estimates well below a 6 percent expansion in 2021.
Transcript
This week, global financial authorities downgraded their outlook for the world economy through 2022 and 2023 – a domino effect of high energy prices and food shortages tied to Russia’s war in Ukraine and the lingering threat of new coronavirus variants.
Pierre-Olivier Gourinchas/Chief Economist – International Monetary Fund: “The latest lockdowns in China could cause new bottlenecks in supply chains. In this context, beyond its immediate and tragic humanitarian impact, the war will slow economic growth and increase inflation.”
As the United Nations reports - over 5 million refugees have now fled Ukraine. Russia’s invasion and subsequent humanitarian crisis have helped sink global growth estimates well below a 6 percent expansion in 2021. The International Monetary Fund forecasts Russia’s sanction-battered economy will shrink 8.5 percent this year while Ukraine’s will plummet by 35 percent.
Kristalina Georgieva/Managing Director – International Monetary Fund: “We are downgrading 143 countries. This is 86 percent of global GDP.”
IMF officials say Europe, heavily dependent on Russian energy, will bear the brunt of economic fallout, with collective growth at just 2.8 percent this year. China is set to drop to 4.4 percent in 2022, with the U.S. down to 3.7 percent – where inflation is running at a four-decade high.
Mary Heimann/Alameda, California: “Poor people depend on coming here. Like, it’s something we need every single week.”
While the risk of extreme poverty exists for tens of millions in nations dependent on Black Sea exports – particularly Russian fertilizer – pundits warn developed nations will feel the strain. Consumer prices are expected to jump nearly 6 percent over the next 12 months.
Dr. Michael J. Puma/Research Scientist – Columbia University: “The number of people facing food insecurity has increased over the last year, especially after the pandemic. I think it is over 800 million people.”
The World Bank announced their largest set of commitments ever to the planet’s poorest nations with a 15-month, $170 billion response package.
David Malpass/President – World Bank: “The fertilizer and energy are critical for the crop cycle, so they’re building on each other and creating a food insecurity crisis that will last at least months and probably into next year.”
For Market to Market, I’m Josh Buettner.