The global economic recovery from the pandemic is losing steam, and a major cause can be found on the battlefields of Ukraine.
- The Russian invasion of Ukraine has taken a toll on global gross domestic product (GDP).
- The International Monetary Fund projects that the war will continue to drag on global economics for the next five years.
- The fighting underscores the argument for peace and continued globalization, one official from the IMF said.
Global GDP will grow by “around 3%” a year for the next five years, Kristalina Georgieva, managing director of the International Monetary Fund (International Monetary Fund), said in a speech in Washington on Thursday. That’s a downgrade from previous forecasts, the worst medium-term outlook since 1990, and below the 3.8% average over the last 20 years, she said.
The sluggish growth forecast highlights just how much the Russian invasion of Ukraine has set back the world’s economic recovery from the pandemic. The war disrupted the supply of oil, natural gas, fertilizer, and other important materials, contributing to inflation in many countries. Georgieva blamed the invasion and its far-reaching consequences for hobbling economic growth, which slowed to 3.4% in 2022 from 6.1% the year earlier.
The consequences of the invasion underscore the need for international cooperation to avoid future wars, Georgieva said.
“This calamity not only kills innocent people; it also worsens the cost-of-living crisis and brings more hunger around the world,” she said. “It risks wiping out the peace dividend we have enjoyed for the past three decades, adding also to frictions in trade and finance.”
She also called on governments to resist cordoning themselves off into competing economic blocs, citing IMF research estimating that the potential fragmentation of trade could reduce global growth by as much as 7%.