Warnings from the World Bank and the IMF

The World Bank, the International Monetary Fund, the United Nations Food Programme and the World Trade Organisation have this week called on all countries to take urgent and coordinated measures to ensure food security. In a joint statement, the leaders of the four institutions have warned that the war in Ukraine adds to pre-existent pressure generated by the Covid-19 pandemic and climate change, endangering millions of people from all over the world.

The much higher prices for basic food products and the disruptions in the supply chain have put a lot of pressure on consumers. Poor countries are the most vulnerable, but average-income countries are also exposed. The war in Ukraine made the IMF revise downwards global economy for 2022 and 2023, in the context of higher prices for food and energy that put high pressure on fragile economies, the IMF chief said Thursday.

Kristalina Georgieva said the Russian invasion of Ukraine sends shock waves across the entire world and puts countries still struggling to recover from the pandemic in an even more difficult situation.  ”To put it simply, we are facing a crisis on top of a crisis. This is a massive setback for the global recovery. In economic terms, growth is down and inflation is up. In human terms, people’s incomes are down and hardship is up,” she explained.

The IMF, which on Tuesday will make public its new economic forecast, will revise downwards 143 economies, that together account for 86% of the world s GDP, but, for most countries, it counts on a positive economic growth. Although a clear figure regarding the advance of world economy has not been made public, Kristalina Georgieva said it will be smaller than the 4.4% forecast made by the IMF in January, a forecast already reduced by half percentage point due to disruptions in the supply chain. According to the IMF, for the first time in many years, inflation has become a clear and present danger for many countries around the world and will stay high for a longer period than expected. According to the IMF, there is another growing risk, namely, ”fragmentation of the world economy into geopolitical blocs—with different trade and technology standards, payment systems, and reserve currencies.”

In Romania, authorities are trying to support the population seriously affected by an inflation rate of over 10%, the biggest level in 18 years. PM Nicolae Ciuca has presented the head of the World Bank, David Malpass, who paid a visit to Bucharest, the ”Support for Romania” programme, worth around 3.5 billion euro, of which more than 60% will go to investment. The Romanian Government also supports the transit of goods, to ease exports from Ukraine, and has plans to develop capacities for electricity production and to expand natural gas exploitation, including off-shore, and capitalise more on its agricultural potential. (EE)