IMF Mentioned Factor That Most Affect the World Economy

International Monetary Fund (IMF)

The International Monetary Fund (IMF) said that there is one factor that will most influence the world economy until next year.

The IMF views the war in Ukraine as the single most important factor for the world economy.

This was stated by IMF Chief Managing Director Kristalina Georgieva on the sidelines of the G20 Summit in Bali, on 15-16 November 2022. She congratulated Indonesia for leading well during a difficult situation.

“Anything that generates more anxiety is, of course, detrimental to prospects for growth and also for meeting the needs and aspirations of people everywhere,” she said.

However, she stressed that the G20 summit was not about the fact that there is a joint declaration on war, but the focus remains on very pressing issues such as global inflation, the rising cost of living, and food and energy security.

“I listened very carefully to all statements and am very encouraging that these are issues we are focused on – as we should be.”

Meanwhile, the IMF previously issued a warning about the fragmentation of the global economy due to the Russia-Ukraine war, and cut its 2023 growth forecast to 2.7%, slowing from the 2022 projection of 3.2%.

According to the IMF, this is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the Covid-19 pandemic.

“We’re already seeing some signs of fragmentation and that stems from legitimate concerns… security of supply,” said Georgieva.

“We’ve seen [this] because of Covid and because of the war in Ukraine, supply chains are disrupted, and that’s hurting growth domestically and internationally.”

She added that if the world chose to go “blocks apart”, there would be a high price to pay.

“And this price will be very high for an open economy, and more broadly for developing countries,” She said.

Asia and the Pacific, for example, could lose more than 3% of the gross domestic product if the trade is halted in sectors hit by US chip sanctions against China and if non-tariff barriers in other areas are raised to Cold War-era levels.

“If we are to avoid losing between US$1.4 [trillion] to maybe US$3.4 trillion a year, then we must project the consequences of actions very carefully and sensibly to prevent ‘sleepwalking’ into a more advanced world.” poor and less secure,” said Georgieva.