A Russian default would have a limited impact on the global economy; the threat is inflation (IMF)

What would be the impact of a Russian default? According to Gita Gopinath, number 2 of the International Monetary Fund (IMF), the direct effect on the rest of the planet would be rather limited”, to the extent that the amounts of the payment terms that Moscow must meet “are relatively low in these moments. .’global scale’.

“This does not represent a systemic risk to the global economy,” he said, while emphasizing that some banks with greater exposure could, however, be more affected.

So far, despite heavy sanctions against Moscow since the Ukraine invasion, Russia has paid its dues. JPMorgan thus received a payment of 66 million dollars from the Russian central bank to pay an interest tranche linked to bonds.

Russia avoids immediate default: JP Morgan has been paid

Important consequences of the war

However, the managing director of the IMF, Kristalina Georgieva, expects significant consequences of the war in Ukraine on the world economy. On March 5, the institution had indicated that eitherIn addition to the conflict itself, the Western sanctions imposed on Russia “will also have a substantial impact on the world economy and financial markets, with collateral effects for other countries,” the IMF warned, adding that they could even be “devastating” if the conflict escalates.

In addition to the IMF, other major international economic organizations such as the EBRD and the World Bank have recently warned of the “widespread” consequences of the Russian invasion of Ukraine for the global economy. In a joint statement issued last Friday, they say they are “appalled and deeply concerned”, and indicate that they met on Thursday to discuss their impact and the collective response to the conflict.

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The signatory organizations, which also include the European Investment Bank (EIB), point out that in addition to “the devastating humanitarian disaster in Ukraine, the war is affecting livelihoods in the region and beyond.”

It reduces the supply of energy, food, increases prices, “will harm the post-pandemic planetary recovery”. Financial markets will also be affected by the uncertainty that will affect asset prices, tighten financial conditions and could even “stimulate capital outflows from emerging markets.”

The war will lead the IMF to revise its forecasts downwards, more than in January (-0.5 points to 4.4%). The world economy should remain “in positive territory”, but a certain number of countries, starting with Russia and Ukraine, as well as neighboring countries directly affected by the conflict, will be in recession, Kristalina Georgieva said.

The great threat of inflation

More broadly, “the very worrying impact is inflation,” he continued. The IMF expected price pressure to ease during the year. However, it is increasing.

The conflict in Ukraine is also changing international trade, noted Gita Gopinath.

“The energy trade will never be the same after the war in Ukraine,” he said as countries strive to reduce their dependence on Russia to the benefit of the United States in particular.

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