Global economy risks fragmenting as a result of Russian-Ukrainian war, IMF warns Business

The UK economy is expected to grow 3.7% this year, down one percentage point from previous forecasts. Although this is much stronger than Germany, France and Italy, UK growth will suddenly slow to 1.2% in 2023 as inflation lowers living standards and rising borrowing costs hit business investment, the IMF said.

Germany is expected to see much slower growth of 2.1% in 2022, almost half of the expansion forecast in January, while Italian GDP will increase by 2.3%, down 1.5 points percentage. The economies of both countries are among the most exposed to Russian gas supplies and soaring prices that are squeezing households and businesses.

The IMF said EU countries were the second biggest drag on its global growth forecast after Russia’s economy, which is expected to contract by 8.5%.

“The war adds to the series of supply shocks that have hit the global economy in recent years,” Gourinchas said.

“Like earthquake waves, its effects will spread far and wide – through commodity markets, trade and financial ties. Russia is a major supplier of oil, gas and metals and, along with Ukraine, of wheat and corn.