Ukraine’s war could trigger a recession in weaker economies, warns IMF chief | Davos

The head of the International Monetary Fund (IMF) said that the war in Ukraine has darkened the outlook for the world economy and could lead to a recession for more vulnerable countries.

Kristalina Georgieva predicts that 2022 will be a difficult year and refused to rule out a global recession if conditions worsen significantly.

Asked at a session on the world economy at the annual meeting of the World Economic Forum in Davos, Switzerland, whether the IMF predicts a global recession, Georgieva said: “Not at this time. That does not mean that one of them is excluded. “

The IMF’s managing director said its organization had recently lowered its growth prospects for 143 of its member states, which account for 80% of world production.

“Since then, the horizon has darkened,” she said, noting that the impact of the war in Ukraine was exacerbated by tightening financial conditions, a rising US dollar and a slowdown in China. “2022 will be a difficult year.”

Along with others in Davos, the IMF chief highlighted the risks of rising food prices. Georgieva said there had been a sense in the past week that the world economy was entering heavier waters. Oil prices have fallen, but “food prices continue to rise, up, up, up.”

She said: “We can reduce petrol consumption when growth slows down, but we have to eat every day. Concerns about access to reasonably priced food worldwide are reaching the roof. ”

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The IMF now forecasts global growth of 3.6% this year, and Georgieva said this is far from negative. “What we can see is a recession in some countries that are weak at first. They have not recovered from the Covid crisis. They are heavily dependent on imports from Russia, energy or food, and already have a slightly weaker environment.

Jane Fraser, CEO of US investment bank Citigroup, told the same panel in Davos that Europe seems particularly vulnerable. “Europe is right in the middle of supply chain storms, the energy crisis and obviously only close to some of the atrocities taking place in Ukraine,” she said.