IMF: EU can face deep recession over crisis in Ukraine

WASHINGTON, Mar 16 (PRIME) -- The crisis in Ukraine and the anti-Russian sanctions could cause a deep recession in the E.U., and the entire global economy will also feel the consequences, the International Monetary Fund (IMF) said in a research note late on Tuesday.

The unprecedented anti-Russian sanctions will hurt economic cooperation and trade in Europe, which will cause a deep economic recession, while Eastern Europe would face an increase of financial risks and a flow of refugees, the IMF analysts said.

The U.S. has little ties to Russia and Ukraine, which should weaken any direct consequences for it, but the country’s inflation is already at the highest level for the past four decades. The prices in the U.S. will continue growing as the Federal Reserve System has started raising interest rates.

The entire global economy will face the consequences of the sanctions in the form of economic slowdowns and increases of inflation. High prices for foods and energy sources would speed up inflation, which will reduce incomes and cut demand. The world will also suffer from disruptions of supply chains and money transfers. Businesses will lose confidence, while uncertainty will grow among investors, and it would exert pressure on prices of assets and toughen financial conditions, causing outflows of capital from emerging markets, the IMF said.

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