Living costs likely to surge: Gita Gopinath on impact of Russia-Ukraine war on world economy

The IMF chief shared a graph showing that Sub-Saharan Africa would witness a maximum increase in food and energy prices

International Monetary Fund's Deputy Managing Director Gita Gopinath said that the ongoing war in Ukraine could have significant consequences for the world.

“Cost of living (is) expected to rise sharply in many countries as energy and food prices skyrocket,” Gita Gopinath tweeted. “Their share in consumption is on average 30% and as high as 50% in Africa. Commodity importers particularly hard hit,” she added.

The chief economist shared a graph showing that Sub-Saharan Africa would witness a maximum increase in food and energy prices followed by Central and Eastern Europe, the Middle East and West Africa, Latin America and Emerging Asia.

She also hinted that the developing nations would be the worst hit due to the crisis. “Besides the higher share of energy & food in consumption in developing countries the passthrough of world prices to prices paid by consumers is also higher. It is 10% for advanced economies, 25% for emerging markets, 50% for low-income countries,” Gopinath stated.

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Earlier, the IMF said that it expected to bring Ukraine's request for $1.4 billion in emergency financing to its board for approval as early as next week and was in talks about funding options with authorities in neighbouring Moldova.

It said price shocks would be felt worldwide, and authorities should provide fiscal support for poor households for whom food and fuel made up a higher proportion of expenses, adding that the economic damage would increase if the war escalated.

"The ongoing war and associated sanctions will also have a severe impact on the global economy," it warned, noting that the crisis was creating an adverse shock to inflation and economic activity at a time when price pressures were already high.

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