Russia's invasion of Ukraine will have significant economic repercussions, impacting the global economic recovery, the leaders of the World Bank and IMF warned on Thursday, signaling that they were ready to help Ukraine.
IMF Managing Director Kristalina Georgieva said she was "deeply concerned" about the fighting's impact on the people of Ukraine, and cautioned in a tweet that the conflict "adds significant economic risk for the region and the world."
The International Monetary Fund continues to assess the economic impact, but will "stand ready to support our members as needed," she said.
The Washington-based crisis lender is in the process of deploying $2.2 billion in assistance to Ukraine under a loan program set to end in June.
Georgieva has said the fund could provide aid to other countries impacted by any spillover effects of the conflict, if needed.
On Twitter, World Bank President David Malpass said he was "deeply saddened and horrified by the devastating developments in Ukraine, which will have far-reaching economic and social impacts."
He added that the Washington-based development lender "is preparing options for large support to the people of Ukraine and the region, including immediate budget support."
The snowballing conflict already has sent oil prices soaring to their highest level since 2014, adding to worrying global inflation pressures.
In January, the IMF cut its world GDP forecast for 2022 to 4.4%, half a point lower than its previous estimate in October, due to "impediments" caused by the latest coronavirus outbreak.
U.S. President Joe Biden on Thursday announced severe new sanctions on Moscow, including freezing assets of major banks and cutting off high-tech exports to the country, in coordination with Europe.
However, analysts note that Moscow has prepared for years to withstand such sanctions, building up a war chest of cash and gold, and has very low debt.
"It's not a coincidence. I think it's a very much part of what we call fortress Russia strategy," said Elina Ribakova of the Institute of International Finance, a global banking association.
"It was a very deliberate shift in macroeconomic policy to accommodate geopolitical ambitions," she told Agence France-Presse (AFP). "They have a piggy bank that can protect them."
The conflict could also change the Federal Reserve's calculus when it comes to fighting inflation in the United States, a central bank official said Thursday.
The Fed next month is expected to hike rates for the first time since COVID-19 broke out, but it might have to move more aggressively if the Ukraine crisis disrupts commodities and raises prices.
Loretta Mester, president of the Cleveland Federal Reserve Bank, said the U.S. central bank will monitor the conflict's impact on the world's largest economy.
"The implications of the unfolding situation in Ukraine for the medium-run economic outlook in the U.S. will also be a consideration in determining the appropriate pace at which to remove accommodation," she said in a speech.