Topline
The International Monetary Fund warned Saturday that Russia’s invasion of Ukraine and the international sanctions it has sparked will have a “severe impact” on the global economy, as the lender said that it plans to bring Ukraine’s prior request for $1.4 billion in financing to the board for approval as early as next week.
An exterior view of the International Monetary Fund building on March 27, 2020, in Washington, D.C. … [+]
Key Facts
The IMF noted that the crisis has spurred further rises in already elevated energy and food prices that will particularly stress poor households around the world.
The IMF said the economic damage of the Russian invasion on Ukraine is “already substantial,” as many seaports and airports have been closed and infrastructure have been destroyed.
The IMF said though it’s difficult to accurately assess Ukraine’s financing needs at this time, it’s clear that the country will face “significant” reconstruction costs due to Russia’s attack.
Key Background
One of the sanctions imposed on Russia is restricting Russian banks’ access to the international financial-messaging system SWIFT. Kicking Russia out of SWIFT could have negative consequences for key trading partners of Russia, including European countries, which could have difficulties paying for the imports of Russian oil and gas they rely on. As the IMF noted in the statement, the economic impact of the war comes against the backdrop of rapid inflation and energy prices that have been rising for months. The Dow dropped 200 points to close its fourth straight week of losses on Friday, while oil prices continued to skyrocket, reaching nearly $120 per barrel. Analysts on Friday warned Americans to expect higher gas prices in the weeks to come after prices in the U.S. soared to a 10-year high. Goldman Sachs said in a note Friday that surging oil prices were “the key inflation risk” for the U.S. and predicted prices could reach up to $150 per barrel. Wheat prices hit a 14-year high on Thursday.
Further Reading
IMF says war in Ukraine will have ‘severe impact’ on global economy (Reuters)
Dow Hits Fourth Week Of Losses, Oil Nears $120 Per Barrel As Russia’s Invasion Of Ukraine Continues (Forbes)
Ukraine war is economic catastrophe, warns World Bank (BBC)
Source: https://www.forbes.com/sites/lisakim/2022/03/05/imf-warns-of-serious-global-economic-consequences-from-russian-invasion-of-ukraine/