The International Monetary Fund (IMF) warned that the war in Ukraine could change the global economic order in the long run. In a blog post titled “How War in Ukraine Is Reverberating Across World’s Regions,” the IMF analyzed on the 15th (local time),
In the article, it stated that war could fundamentally change the global economy and geopolitical order in the long run due to energy trade changes, supply chain restructuring, payment network fragmentation, and inventory of reserve currencies.
It stressed that the heightened geopolitical tension further increases the risk of division related to the economy, especially trade and technology.
Beyond the pain and humanitarian crisis caused by Russia’s invasion of Ukraine, the entire global economy will feel the impact of slowing growth and accelerating inflation, the IMF said.
The IMF explained that the rise in prices of food and energy-related products can worsen inflation, reducing the value of income and putting a burden on demand.
The article then pointed out that Ukraine’s neighbors would suffer from disruptions in trade, supply chains, remittances, and a historic surge in refugees.
It also analyzed that falling confidence in companies and increasing investment uncertainties could lead to pressure on asset prices, strained financial conditions, and triggering capital outflows in emerging markets.
The IMF emphasized that Russia and Ukraine are major commodity producers, and the confusion caused prices to soar worldwide, especially prices related to crude oil and natural gas.
Food prices, including wheat, which accounts for 30% of global exports, have soared to an all-time high, it added. In addition to the global ripple effect, countries with direct trade, tourism, and financial exposure will feel additional pressure.
