The International Monetary Fund (IMF) has downgraded its global growth forecast following the war in Ukraine, warning that Russian aggression could lead to the disintegration of the world economy.
According to its latest update, the IMF said the outlook has deteriorated significantly over the past three months as it reduced its global growth forecast for 2022 from 4.4% to 3.6%.
The IMF also said growth in each of the G7 group countries is projected to be less rapid this year than previously expected, and there is a strong risk of it getting worse.
The war in Ukraine has created a very real prospect that much of the recent Covid-19 recovery will be wiped out, according to the IMF.
He added that frequent and more widespread coronavirus restrictions in China have slowed economic activity in the country and could cause new congestion in the global supply chain.
According to the IMF, the U.S. economy is forecast to suffer the least damage from the war with an expansion of 3.7% this year, slightly down from initial estimates for 3.9% growth.
Meanwhile Germany and Italy, which are both more vulnerable to the impact of sanctions on Russia, are expected to experience growth of 2.1% and 2.3% with downs of 1.7% and 1.5% respectively from previous projections.
The UK is expected to be the best performing country in the G7 this year, although its projection has been reduced to 3.7% from 4.7%. However, the country is expected to experience a significant decline in 2023 with growth of only 1.2% due to the high cost of living.
Moreover, the IMF expects the Ukrainian economy to shrink by 35% this year, while Western sanctions on Russia put it on track for an 8.5% contraction.
