Russia’s war on Ukraine is expected to have serious economic consequences for Europe at a time when the economic recovery from the coronavirus pandemic was incomplete, the International Monetary Fund (IMF) said in a report on Friday.
“Sharp increases in commodity prices and worsened supply disruptions will further fuel inflation and reduce household incomes and business profits,” says the report, titled Regional Economic Outlook for Europe.
“Inflation is expected to hit multi-decade highs in many countries. And new risks are looming from escalating fighting and disruptions to critical energy flows,” he added.
IMF concerns come after Turkish Treasury and Finance Minister Nureddin Nebati issued a similar warning in March in the event of a protracted war.
The IMF said the main challenges for European policymakers are caring for refugees, helping vulnerable households and businesses trying to cope with higher energy costs and improving energy security.
“The war and its consequences will also add to the structural challenges facing post-pandemic Europe. In Ukraine, the social and economic infrastructure destroyed by the war will have to be rebuilt, which will require large flows of financing from the from the donors,” he added.
The Russian-Ukrainian war, which began on February 24, sparked international outrage, with the European Union, the United States and the United Kingdom, among others in the West, implementing harsh financial sanctions against Moscow.