War in Ukraine will slow European and global economic recovery, IMF says

In addition to the human losses, there are the economic damages. The war led by Russia in Ukraine should cause the economic recovery in the euro zone to slow down in 2022, according to forecasts from the International Monetary Fund (IMF) published on Tuesday 19 April. Overall, the impact of the war in Ukraine is all the stronger as it occurred when the economy was not fully recovered from the pandemic.

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The international institution is now expecting euro area GDP growth of 2.8% in 2022, compared to 3.9% in January. The slowdown is mainly due to “the global rise in energy prices”specifies the IMF, which will particularly affect Italy and Germany because of“a relatively large manufacturing sector and greater dependence on Russian energy”. France’s GDP is expected to increase by 2.9% this year, down slightly from the January forecast (-0.6 points).

According to the IMF, this slowdown risks weakening the public finances of certain States. But “this should not prevent governments from offering targeted assistance to refugees displaced by conflict, households affected by rising food and fuel prices and those affected by the pandemic”writes the chief economist of the IMF, Pierre-Olivier Gourinchas.

It is obviously Ukraine’s growth that is hardest hit: GDP is expected to fall by 35% this year, due to massive destruction and the flight of millions of people. Returning to pre-war levels would take years even if the conflict ended immediately, according to the IMF.