Global economic growth will slow to 2.8% in 2022 – EIU

Such a forecast is based on expectations that hostilities in Ukraine will end no earlier than the end of 2022

The research and analytical agency Economist Intelligence Unit (EIU) expects the world economy to grow by 2.8% by the end of 2022. It is reported  by The Economist.

In February the agency expected global GDP to grow by 3.9%. But 9 days after the publication of the forecast, Russia invaded the territory of Ukraine, starting a full-scale war. Since then, the economic consequences of the war have been felt all over the world.

“The war in Ukraine has put pressure on global commodity prices, exacerbated disruptions in supply chains, and contributed to the rapid growth of inflation in most countries of the world. In addition, the economy is being pressured by China’s policy of fighting the conavirus,” the report says.

The updated forecast predicts that hostilities will continue until at least the end of 2022. As the agency notes, the war reduced the global GDP forecast by $1 trillion. Other organizations also expect a sharp decrease in the indicator, in particular, the IMF predicts a decrease in growth rates to 3.2%.

At the same time, Russia will suffer the biggest losses among the G20 member countries in 2022.

“Initially, its economy withstood Western sanctions well, but by the end of the year, the GDP of the Russian Federation is expected to fall by 10% compared to the forecasted growth of 2.6% at the beginning of the year. Ukraine will suffer an even more serious blow due to the loss of infrastructure, businesses and people’s migration,” the agency notes.

Some countries will manage to resist this trend, but most countries will suffer from the Russian war. In addition, in 2023, an even greater slowdown in the growth of the global economy is predicted, so few countries will be able to avoid the economic consequences.

Earlier the IMF worsened global GDP growth forecast to 3.2% from 3.6% by the end of 2022, and to 2.9 from 3.6% in 2023. The fund also warned of serious risks of fragmentation of the world economy into geopolitical blocs with their own organizations due to the war in Ukraine.

As GMK Center reported earlier, for the first quarter the Ukrainian GDP collapsed by 15.1%. According to the estimates of the Ministry of Finance, during the war, Ukraine spends about $10 billion per month, of which $5-6 billion must be covered with the help of external revenues. In general, expectations for a decrease in Ukraine’s GDP in 2022 range from 30-47%.