International Monetary Fund logo I Photo:AFP
Washington: Russia's invasion of Ukraine has rocked markets and prompted countries to impose retaliatory measures that could hurt the global economy, but no financial crisis has materialized yet, the IMF said Tuesday.
In its latest Global Financial Stability Report, the Washington-based crisis lender said Moscow's attack on its neighbor is "not a global systemic event from a financial standpoint," but nonetheless distressing as countries recover from the pandemic amid high inflation.
"Despite the anticipated economic impact, especially in the war region and Europe, no global systemic event affecting financial institutions or markets has materialized so far," the IMF said.
However, the report warns that "financial stability risks have risen on several fronts," the report warns.
Those risks "may test the resilience of global financial markets amid huge uncertainties, especially should stress interact with preexisting vulnerabilities."
Prices for crude oil and other commodities have surged globally since the invasion began in late February, while Western sanctions against Moscow have increased the risk of a Russian debt default, which could have aftershocks that spread beyond its financial system.
The IMF said "the war has crystallized specific amplification channels of the shock that operate through financial markets," such as causing volatility in commodities prices.
The conflict could shock commodity prices and push inflation higher, or prompt cyberattacks that hit the global financial system.
These could negatively impact the shift to green energy worldwide, the IMF said, noting that "higher commodity prices and supply disruptions will likely make the transition toward energy renewables more costly and complex."
Beyond the impact of the war, the report pointed to China, saying a recent sell-off in stocks combined with a debt crisis in the real estate sector and rise in Covid-19 cases "has raised concerns about a growth slowdown, with possible spillovers to emerging markets."