Skip to content
IMF downgrades outlook for global economy to 3.6% this year

The International Monetary Fund on Tuesday downgraded the outlook for the world economy this year and next, blaming Russia’s war in Ukraine for disrupting world trade, pushing up oil prices, threatening food supplies and to increase the uncertainty already heightened by the coronavirus and its variants.

The 190-country lender cut its forecast for global growth to 3.6% this year, a sharp drop from 6.1% last year and the 4.4% growth it forecast for 2022 in January. He also said he expects the global economy to grow a further 3.6% next year, slightly lower than the 3.8% it forecast in January.

Canada’s economy is expected to grow by 3.9% this year, before dropping to just 2.8% in 2023.

The war – and the darkening outlook – came just as the global economy appeared to be shedding the impact of the highly contagious Omicron variant.

“The war will slow economic growth and increase inflation,” IMF chief economist Pierre-Olivier Gourinchas told reporters on Tuesday.

The economy of Russia and Ukraine is expected to contract

Now the IMF expects Russia’s economy – battered by sanctions – to shrink by 8.5% this year and Ukraine’s by 35%.

US economic growth is expected to fall to 3.7% this year from 4% previously and also from the 5.7% pace seen in 2021, which was the best year for the US economy since 1984. interest rates from the Federal Reserve, intended to fight against the resurgence of inflation, and an economic slowdown in the main American trading partners.

Europe, heavily dependent on Russian energy, will bear the brunt of the economic fallout from the Russian-Ukrainian war. For the 19 countries that share the euro, the IMF predicts collective growth of 2.8% in 2022, down sharply from the 3.9% it forecast in January and 5.3% for the year last.

The IMF expects growth in China’s economy, the world’s second-largest, to slow to 4.4% this year, from 8.1% in 2021. Beijing’s zero-COVID strategy has led to draconian shutdowns in bustling commercial cities like Shanghai and Shenzhen.

WATCH: Economic impact of Russia’s invasion of Ukraine, IMF says:

International Monetary Fund official discusses economic impact of Russian invasion of Ukraine

Gita Gopinath, First Deputy Managing Director of the International Monetary Fund, speaks with CBC Chief Political Correspondent Rosemary Barton about the economic consequences of Russia’s invasion of Ukraine. The IMF has approved emergency financing of US$1.4 billion for Ukraine. 8:19

Oil producers should do better than most

Some commodity-exporting countries, taking advantage of rising commodity prices, are expected to defy the trend of slowing growth. For example, the IMF raised its growth forecast for the Nigerian oil producer to 3.4% this year, from 2.7% the fund announced in January.

The global economy had rebounded with surprising strength from the brief but brutal coronavirus recession of 2020. But the rebound presented its own problems: Taken by surprise, businesses rushed to meet a surge in customer orders, which overwhelmed factories, ports and freight stations. The result: long shipping times and higher prices.

The IMF predicts a 5.7% rise in consumer prices in the world’s advanced economies this year, the highest since 1984. In the United States, inflation is at its highest level in four decades.

Central banks are raising interest rates to counter rising prices, a move that could stifle economic growth. By driving up the prices of oil, natural gas and other commodities, the Russian-Ukrainian war has made their task of fighting inflation while preserving economic recovery even more difficult.

The conflict has also ‘triggered Europe’s biggest refugee crisis since World War II’, the IMF noted, and cut supplies and raised prices for fertilizers and grain produced in Russia and Ukraine, threatening security. food in Africa and the Middle East. In a speech last week, IMF Managing Director Kristalina Georgieva warned of the threat of “more hunger, more poverty and more social unrest”.