The International Monetary Fund “will come up with” downward revisions to its World Economic Outlook global growth projections next month due to the impact of Russia’s invasion of Ukraine, MD Kristalina Georgieva said on Thursday.
Speaking at a virtual media roundtable, Georgieva said
the Russia-Ukraine war is particularly troubling for emerging markets .
Already, the war means emerging economies such as SA, Turkey and China — which were expected to grow by about 2%, 2-3%, and 5% respectively — would see their growth outlook cut by between a fifth and a half should the world’s economic outlook slow down by one percentage point, World Bank Group vice-president for equitable growth, finance and institutions Indermit Gill said in a note this week.
In a statement, the IMF said the impact of the war will also lead to faster and further tightening measures of monetary policy stances across the African continent, “which is worrisome since some countries’ monetary policies were already tight”.
The IMF briefing came after its meeting with African finance ministers, central bank governors, and representatives from the United Nations Economic Commission for Africa (Uneca) on Wednesday. The meeting discussed the impact of the crisis in Ukraine, as well as how Africa’s policymakers can sustain the recovery in their respective countries, which is already lagging other regions even before the significant new obstacles caused by the war.
The IMF said the Ukraine-Russian crisis threatens to undo some of the progress made just as the world economy and African countries were starting to recover from the ravages of the Covid-19 pandemic.
It added that Africa is particularly vulnerable to impacts from the war in Ukraine through four main channels — increased food prices, higher fuel prices, lower tourism revenues, and potentially more difficulty accessing international capital markets.
Another significant concern noted by the IMF was the limited domestic policy space for African countries to sustainably address the ongoing crisis.
The IMF said African countries need to redouble and prioritise their efforts to advance reforms that promote resilience.
“We stand ready to help African countries address the repercussions of the war, and to help them design and implement reforms through our policy advice, capacity development, and lending.,” the IMF said.
“Recent reforms to the Fund’s lending toolkit provide greater flexibility to help meet financing needs,” it said.
Georgieva said the IMF is pleased by the ongoing strong interest from African countries in the proposed Resilience and Sustainability Trust which the IMF plans to make fully operational by the end of this year.
The IMF has set aside a $50bn trust fund to help low-income and vulnerable middle-income countries build resilience to balance of payments shocks and ensure sustainable recovery.
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