The war in Ukraine is the “single most important negative factor” for the global economy this year — and probably for 2023 as well, IMF chief Kristalina Georgieva told CNBC Wednesday.
“We assess the war in Ukraine as the single most important negative factor for the world economy this year, most likely next year as well,” she told CNBC’s Martin Soong on the sidelines of the Group of 20 meeting in Bali, Indonesia.
“Anything that creates more anxiety is naturally harmful to the prospects for growth and to meeting the needs and aspirations of people everywhere,” said the managing director of the International Monetary Fund.
Her comments were in response to a missile that hit Polish territory late Tuesday, killing two civilians.
Preliminary assessments suggest the Russian-made missile was fired by Ukrainian forces at an incoming Russian missile.
International Monetary Fund Managing Director Kristalina Georgieva attends a meeting during the G20 summit in Nusa Dua on the Indonesian resort island of Bali on November 16, 2022.
Willy Kurniawan Afp | Getty Images
The NATO Secretary General said “there was no indication that this was the result of a deliberate attack”, although investigations were ongoing.
“But let me be clear, this is not Ukraine’s fault. Russia bears the ultimate responsibility as it continues its illegal war against Ukraine,” Jens Stoltenberg said.
Most G-20 members condemned Russia’s aggression against Ukraine in a draft statement on Tuesday.
“I want to congratulate Indonesia for such a good presidency, in this very difficult moment,” she said.
However, she emphasized that the G-20 summit is not about the fact that there is a common declaration, but the focus was “very urgent problems” – such as global inflation, the rising cost of living, food and energy security.
“I have listened very carefully to all the statements and it is encouraging that these are the issues we are focusing on – as we must.”
‘High price to pay’ for fragmentation
“We are already seeing some signs of fragmentation and they come from a legitimate concern … the security of supply,” Georgieva told CNBC.
“We saw [this] because of covid and because of the war in ukraine, that supply chains are being interrupted, and that is hurting growth nationally and internationally.
She added that if the world chooses to go into “separate blocs” it will pay a heavy price.
“And this price would be particularly high for open economies, and more broadly for the developing world,” Georgieva warned.
Asia and the Pacific, for example, could lose over 3% in gross domestic product if trade is cut in sectors hit by US chip sanctions against China, and if non-tariff barriers in other areas on “Cold War -Era levels” will be increased. ” said the IMF in a report last month.
“If we don’t want to lose somewhere between $1.4 [trillion] to maybe $3.4 trillion a year – just imagine what we could do with this money – then we should very carefully project the consequences of actions and be wise to avoid sleepwalking into a world that is poorer and less secure ,” said Georgieva.
