Transcript of April 2022 World Economic Outlook Press Briefing

April 19, 2022


Pierre‑Olivier Gourinchas, Economic Counselor and Director of the Research Department, IMF

Petya Koeva Brooks, Deputy Director, Research Department, IMF

Malhar Nabar, Division Chief, Research Department, IMF

Nadya Saber, Senior Communications Officer, IMF

Ms. Saber: Good morning, everyone. Thank you for joining this press conference on the IMF's World Economic Outlook.

I am Nadya Saber with the Communications Department, and I am so pleased to introduce this morning the IMF's Economic Counsellor and Director of the Research Department Pierre‑Olivier Gourinchas. He is joined by Petya Koeva Brooks, Deputy Director of the Research Department, and Malhar Nabar, head of the World Economic Studies Division. Pierre‑Olivier will make some brief remarks, and then we will take your questions. Pierre‑Olivier?

Mr. Gourinchas: Well, thank you, Nadya. And good morning to everyone joining us.

Global economic prospects have been severely set back, largely because of Russia's invasion of Ukraine. This crisis unfolds as the global economy has not yet fully recovered from the pandemic.

Even before the war, inflation in many countries had been rising due to supply‑demand imbalances and policy support during the pandemic, prompting a tightening of monetary policy. The latest lockdowns in China could cause new bottlenecks in supply chains. In this context, beyond its immediate and tragic humanitarian impact, the war will slow economic growth and increase inflation. Overall economic risks have risen sharply, and policy trade‑offs have become even more challenging.

Compared to our January forecast, we have revised our projection for global growth downwards to 3.6 percent in both 2022 and 2023. This reflects the direct impact of the war in Ukraine and sanctions on Russia, with both countries projected to experience steep contractions. The growth outlook for the European Union has been revised downward by 1.1 percentage points due to the indirect effects of the war, making it the second largest contributor to the overall downward revision.

The war adds to the series of supply shocks that have struck the global economy in recent years. Like seismic waves, its effect will propagate far and wide through commodity markets, trade, and financial linkages.

Russia is a major supplier of oil, gas, and metals, and, together with Ukraine, of wheat and corn. Reduced supplies of these commodities have driven their prices up sharply. Commodity importers in Europe, the Caucasus and Central Asia, the Middle East, north Africa, and sub‑Saharan Africa are most affected. But the surge in food and fuel prices will hurt lower‑income households globally, including in the Americas and the rest of Asia.

Eastern Europe and Central Asia have large direct trade and remittance links with Russia and are expected to suffer. The displacement of about 5 million Ukrainian people to neighboring countries‑‑especially Poland, Romania, Moldova, and Hungary‑‑adds to the economic pressures in the region.

The medium‑term outlook is revised downwards for all groups, except commodity exporters, who benefit from the surge in energy and food prices. Aggregate output for advanced economies will take longer to recover to its prepandemic trend. And the divergence that opened up in 2021 between advanced and emerging markets and developing economies is expected to persist, suggesting some permanent scarring from the pandemic.

Inflation has become a clear and present danger for many countries. Even prior to the war, it surged on the back of soaring commodity prices and supply‑demand imbalances. Many central banks, such as the Federal Reserve, had already moved toward tightening monetary policy. War‑related disruptions amplify those pressures.

We now project inflation will remain elevated for much longer. In the United States and some European countries, it has reached its highest level in more than 40 years in the context of tight labor markets. The risk is rising that inflation expectations drift away from central bank inflation targets, prompting a more aggressive tightening response from policymakers.

Furthermore, increases in food and fuel prices may also significantly increase the prospect of social unrest in poorer countries.

Immediately after the invasion, financial conditions tightened for emerging markets and developing countries. So far, this repricing has been mostly orderly; yet several fragility risks remain, raising the prospect of a sharp tightening of global financial conditions, as well as capital outflows.

On the fiscal side, policy space was already eroded in many countries by the pandemic. The withdrawal of extraordinary fiscal support was projected to continue. The surge in commodity prices and the increase in global interest rates will further reduce fiscal space, especially for oil‑ and food‑importing emerging markets and developing economies.

The war also increases the risk of a more permanent fragmentation of the world economy into geopolitical blocs with distinct technology standards, cross‑border payment systems, and reserve currencies. Such a tectonic shift would cause long‑run efficiency losses, increase volatility, and represent a major challenge to the rules‑based framework that has governed international and economic relations for the last 75 years. Uncertainty around these projections is considerable, well beyond the usual range. Growth could slow down further, while inflation could exceed our projections if, for instance, sanctions extend to Russian energy exports.

A continued spread of the virus could give rise to more lethal variants that escape vaccines, prompting new lockdowns and production disruptions. In this difficult environment, national‑level policies and multilateral efforts will play an important role. Central banks will need to adjust their policies decisively to ensure that medium‑ and long‑term inflation expectations remain anchored. Clear communication and forward guidance on the outlook for monetary policy will be essential to minimize the risk of disruptive adjustments.

Several economies will need to consolidate their fiscal balances. This should not impede governments from providing well‑targeted support for vulnerable populations, especially in light of high energy and food prices. Embedding such efforts in a medium‑term framework with a clear, credible path for stabilizing public debt can help create room to deliver the needed support.

Even as policymakers focus on cushioning the impact of the war and the pandemic, other goals will require their attention. The most immediate priority is to end the war.

On climate, we must close the gap between stated ambitions and policy actions. An international carbon price floor, differentiated by country income levels, would provide a way to coordinate national efforts aimed at reducing the risk of catastrophic climate events. Equally important is the need to secure equitable worldwide access to the full complement of COVID‑19 tools‑‑monitoring, tests, vaccines, treatments, to contain the virus and to address other global health priorities. Multilateral cooperation remains essential to advance these goals.

Policymakers should also ensure that the global financial safety net operates effectively. For some countries, this means securing adequate liquidity support to tide over short‑term refinancing difficulties; but for others, comprehensive sovereign debt restructuring will be required. The Group of 20's Common Framework for Debt Treatments offers guidance for such restructurings, but it has yet to deliver. The absence of an effective and expeditious framework is a fault line in the global financial system.

Particular attention should also be paid to the overall stability of the global economic order to make sure that the multilateral framework that has lifted hundreds of millions out of poverty is not dismantled. These risks and policies interact in complex ways over varying time frames. Rising interest rates and the need to protect vulnerable populations against high food and energy prices make it more difficult to maintain fiscal sustainability. In turn, the erosion of fiscal space makes it harder to invest in the climate transition, while delays in dealing with the climate crisis make economies more vulnerable to commodity price shocks, which feeds into inflation and economic instability. Geopolitical fragmentation worsens all these trade‑offs, increasing the risk of conflict and economic volatility and decreasing overall efficiency.

In a matter of just a few weeks, the world has yet again experienced a major shock. Just as a durable recovery from the pandemic was in sight, war broke out, potentially erasing recent gains. The many challenges we face call for commensurate and concerted policy actions at the national and multilateral levels to prevent even worse outcomes and improve economic prospects for all. Thank you.

Ms. Saber: Thank you so much, Pierre‑Olivier.

Now we will take your questions, which you can send us online on the IMF Press Center or on WebEx, where we ask that you use the "raise hand" feature and turn your cameras on.

We will start with WebEx this morning. We have a question from Andrea Shalal from Reuters. Andrea?

Questioner: Good morning. Thanks so much for doing this.

I wanted to ask if you could just walk us through what you think the impact would be of this fragmentation that you have described, that is potentially happening, and what, you know, you lacked in the assumptions for the conference‑‑for this document already at the end of March. And, since then, we have seen significant sanctions, and more are coming. In fact, we know that the European Union is also working on some sanctions that would affect energy. So even in that space of time already, would you say that the outlook has worsened? Thanks.

Mr. Gourinchas: Well, thank you, Andrea. Let me first address the first part of your question, on fragmentation.

First, it is important to put things into perspective a little bit. We are on a path toward a multipolar world, and that just reflects the rise of emerging markets in the global economy. So eventually, we know that we are going to be in a world in which it is not just the United States dollar; it is not just the dominance of the dollar.

The question is, what kind of transition we put in place to get there. And one scenario is one where we have divided blocs that are not trading much with each other, that are on different standards. And that would be a disaster for the global economy. The other scenario is one where we have a managed transition that maintains and protects the gains from globalization that have lifted hundreds of millions out of poverty, have allowed emerging market economies to see their economies soar in the last 30, 40 years. So the difficulty here is going to be to engage on this managed transition path that leads us to this more multipolar world.

Now, in terms of how the assumptions have changed and how the situation on the ground has changed in the last few weeks, we highlight in the report that there are a number of downside risks that could emerge in the coming year. Now, one of them is, for instance, a tightening of the sanctions. We have, in the report, an adverse scenario box, where we evaluate what would happen if there is a tightening of sanctions, coupled with a decline in consumer confidence and some volatility on financial markets. And we estimate that this would lead to a more severe downturn or revision to output growth by about 2 percent of the level of output globally.

Ms. Saber: OK. Thank you. We will continue with WebEx. We have a question from Maolin Xiong from Xinhua.

Questioner: Thank you so much for taking my question. I just want to follow up on Andrea's question on the fragmentation. I wanted to ask, how likely do you think the permanent fragmentation would happen? And what is the IMF's suggestions for policymakers on that front? Thanks.

Mr. Gourinchas: Well, thank you. As I mentioned, we think that fragmentation is more of a long‑run risk than a short‑run risk. It is something that we want to think very carefully about.

We are not anticipating that there would be immediately a severe dislocation, but you could see countries sort of deglobalizing or reverting and undoing some of the gains from trade integration. And that is certainly a source of worry for us. So we are really trying to make sure that countries remain integrated as much as possible.

We have a chapter in our report that documents some of the gains that have been achieved, even during the pandemic crisis, in terms of the resiliency of the global supply chains. And undoing some of this would be detrimental to global growth and standards of living.

Ms. Saber: Thank you. So we will continue with WebEx. We have a question from Larry Elliott from The Guardian.

Questioner: Thank you. I've got two questions, one specifically about the U.K. and one more general.

The U.K. goes from being one of the fastest‑growing G‑7 economies this year to being the slowest next year. And I wondered whether you could explain the IMF's thinking behind why that is.

The second question is about debt, where you criticize the failures of the Common Framework. And I wondered whether you've got any ideas for how the debt relief program could be made more comprehensive and more sustainable.

Mr. Gourinchas: Well, thank you. So on the U.K., I think what we are seeing in our projections is that the U.K. is facing elevated inflation pressures and has started tightening its monetary policy. And this is one of the factors that is going to weigh down on economic activity, both this year and the next.

But maybe let me turn it over to my colleague Petya, who can maybe provide some additional details.

Ms. Koeva Brooks: Thank you very much.

We are projecting this year the U.K. economy to grow by about 3.7, which is a downward revision of about 1. And the main reason for that is just the major supply shock that the economy is facing. That said, I should also say that we have had larger revisions in a number of countries in Europe, notably, Germany as well as Italy.

Questioner: I'm sorry. Could the question be answered about the debt relief program, the Common Framework?

Mr. Gourinchas: Yes. I'm sorry about that.

On the debt relief and the Common Framework, one of the purposes of the Common Framework is to bring creditors from the official sector around the table, both Paris Club creditors but also other official creditors from, you know, China, India, and other countries, and then to facilitate the process of debt restructuring. And everyone has to understand that when a country is in a situation where debt is not sustainable, it is in the interest both of the borrowing country but also of the creditors to have an expeditious process.

And right now, the Common Framework is not really proceeding quickly in terms of providing a resolution. There are issues in terms of transparency. There are issues in making sure that there is comparable treatment of creditors, both official creditors and private creditors. And so we need a process that works much faster and much better in dealing with situations of insolvencies.

Ms. Saber: Thank you. We will take a question on WebEx from Eric Martin from Bloomberg.

Questioner: Yes. Good morning. Thank you. I wanted to ask about the outlook for the Euro area. And I understand that the overall reduction in the forecast is of 1.1 percent from the forecast in January. But what is the risk or what is the concern about the potential for a recession at some point during the year in the eurozone?

Mr. Gourinchas: Well, Eric, you are right. We are seeing a downward revision of 1.1 percentage point for the euro area, to 2.8 percent for 2022. And we have numbers for 2023 at 2.3 percent growth rate. So that is a significant downward revision. As I have mentioned in my remarks, the European Union and the euro area are seeing one of the largest downward revisions in our new forecasts. And clearly, here, the impact is related to the war, and it is related to the energy costs that have been rising in Europe and the high dependence on‑‑in particular, on Russian sources of energy.

So some of the risks are associated with that. For instance, if there is a tightening of the sanctions, something that, as mentioned, we have explored in an adverse scenario in the WEO‑‑that is not our baseline, but this is something that we think we need to pay some attention to‑‑then there would be a more significant reduction in economic activity in the euro area, projecting something of the order of a 3 percent decline in the level of activity by year‑end of 2023 in that case. So there are very significant downside risks for the euro area.

Inflation pressures are also rising, and so there is a risk that there might be a need for more of a tightening from the European Central Bank. And we are also seeing some softening in terms of consumer confidence that could also indicate that there is some slowdown in economic activity more broadly.

Again, let me turn it over to my colleague Petya, who can provide some additional details.

Ms. Koeva Brooks: Thank you. I do not have much to add, just to say that even though we have downgraded significantly the growth numbers for the euro area, we do not have a recession in the baseline. And "recession" being defined as two quarters of negative growth. So we do not have that in the baseline.

The other thing to point out is that we do have quite a lot of divergences in the growth outlooks within the euro area, differences across countries. As I already mentioned, Germany and Italy are on one end, with fairly sizable revisions of about 1.7, 1.5; and on the other end of the spectrum, you have France, where the revision is the order of 0.5.

Ms. Saber: Great. Thank you.

Now we will move to the Press Center. We have received some questions online, and these are more country questions. So we have a question from Nehal Samir from Daily News Egypt, asking: How do you see Egypt's economy, especially after designing a new loan‑backed program? And what are the reasons behind upgrading the IMF's projection for Egypt's growth for 2021 and 2022?

Mr. Gourinchas: Well, so we are seeing a significant downgrade in our growth estimates for India of 0.8 percentage points for 2022, and there are two main reasons for this. One is, India is an oil‑importing country, so it is suffering, like many other countries, as a consequence of the war, a negative terms of trade shock. Higher food and energy prices are weighing down on their trade balance. And at the same time, India's external demand is also softening because the rest of the world is growing at a slow rate, so we see some softening coming through external demand.

More specifically on India, let me turn it to my colleague Malhar, who can maybe address some additional points.

Mr. Nabar: Thanks, Pierre‑Olivier.

Well, the dynamic at work in the Indian economy is quite similar to what we are seeing for the Egyptian economy as well. These are net importers of commodities. In India, it is the case that it is oil. In Egypt's case, it is wheat. And in terms, specifically on Egypt outlook, the question on the upgrade to this current fiscal year is because of the strong performance in the first half of the fiscal year.

But perhaps, Petya, you may want to add a bit more on Egypt.

Ms. Koeva Brooks: Yes, sure. I would be happy to do that.

I think the war has been a major setback and a major shock for the Egyptian economy. And that is perhaps not so evident when you look at the numbers at first glance because we have upgraded the 2022 number by 0.3, but that is entirely because of the strength in the economy prior to the war. Whereas, at the same time, we have downgraded our forecast for 2023 to 5 percent. And, again, we have already seen‑‑the first‑order impact of the war has been‑‑we have seen capital outflows, and we have seen the swift reaction of the authorities in terms of raising interest rates, allowing the currency to depreciate, and also allowing some draw‑down of reserves.

Another channel through which we have seen the impact is through high commodity prices and high food prices. In particular, Egypt is a major exporter‑‑importer of wheat. And for all of these reasons, we have seen that the authorities have requested IMF support, and our team has been engaging and is in the process of talking to the authorities about the best way forward.

Ms. Saber: Great. Thank you, Petya.

So we will continue on the Press Center. We have a question from La Opinión. The question is: Are those global negative consequences of the war in Ukraine a reason to deglobalize, to make economies less interdependent? What are still the net gains of globalization to deal with the current economic issues?

Mr. Gourinchas: Well, that seems to be a common theme in a number of the questions. Let me, again, sort of emphasize what our view is on the process of globalization and fragmentation.

We see this as a serious risk. Of course, there could be questions of energy security, and there could be questions of national security. But beyond that, the body of evidence that we have indicates that countries are able to grow faster, are able to increase their standards of living to higher levels when they are benefiting from being inserted into the global economy and when they can be plugged into global supply chains that are quite diversified and resilient. So a move toward more fragmentation would undo many of these gains and would potentially lead to efficiency losses and reduced standards of living or not allow them to grow as quickly as what we have seen in the past.

Ms. Saber: Great. Thank you. Now we will move back to WebEx. We have a question from Shu Takaoka from Jiji press.

Questioner: Hi. Thank you very much for taking my questions.

My question is on the appreciated US dollar. The US dollar has appreciated further this morning, mainly due to accelerated monetary policy especially, including against the Japanese yen. And what do you see as the implications on a high dollar, especially in terms of the net commodity import countries?

Mr. Gourinchas: Well, yes. We have observed that as a result of very divergent monetary policy stances across different countries, we have had some pretty substantial realignment of currencies. I mean, we have seen since the beginning of the year, as countries like the U.S. have been starting to tighten their monetary policy or announcing that they will tighten their monetary policy at a much faster pace, we have seen strength in their currency. By contrast, a country like Japan, in which the Bank of Japan has maintained a fairly accommodative monetary policy stance, has seen its currency depreciate.

More generally, countries that have been energy and oil and food importers have seen their currency depreciate. Countries that have been closer to the epicenter of the war‑‑so Eastern European countries that are close to Ukraine and Russia‑‑have seen their currency also depreciate, as they are more affected.

Now, as these currencies depreciate, that can create some turmoil in some of these economies. It could lead to additional [import] inflation in terms of imported goods. It could also create or exacerbate some financial fragilities. We have not seen too much of that until now, but that could still come. So this is certainly something that we are monitoring fairly closely. But for some countries‑‑and Japan is one of them‑‑adjustments in the exchange rates have been quite significant in the last few months.

Ms. Saber: Great. Thank you. So we will continue with WebEx. We have a question from Shabtai Gold from Devex.

Questioner: Hi. Thank you. I was going to ask you, you mentioned briefly this issue about social unrest and that that could be caused by the various headwinds. I was wondering if you could elaborate a little bit on that. Are there any number of countries that you are looking at? Is there a particular region that you are looking at? Is there a certain category of country that you are looking at? Anything that you can do to sort of quantify which countries are at risk? And then, relatedly, what is the IMF able to do at this point to sort of accelerate some of its programs to help prevent some social unrest? Thank you.

Mr. Gourinchas: Well, thank you. This is obviously a very important issue for us and for the international community more broadly. The increase in food and energy price is one of the drivers here of potentially the rise in social unrest. I mean, we know that when food and energy prices‑‑which represent up to 40 percent of the consumption basket for lower‑income households or in poor countries, when these prices rise and if they rise sharply, that could create a lot of hardship and a lot of instability, potentially food insecurity. So that is certainly something that has been correlated in the past with demands from vulnerable households to obtain some protection, access to affordable food and energy.

So our recommendation here at the IMF is, first, we are a part of‑‑we have been calling for urgent and coordinated action on the food crisis, together with the World Bank, the World Food Programme, and other international organizations. We are really urging the international community to do all it can to provide funding and to provide food supplies to vulnerable populations around the world.

In terms of our own policy advice, we are also urging countries to implement fiscal policy that will support vulnerable populations. In some countries, it could take the form of disbursing payments through existing social programs. In other countries, where the infrastructure is not necessarily there, it might have to happen through food or energy subsidies. These will have to be carefully calibrated and be temporary to make sure that they do not create another problem, which would be exhausting fiscal space and fiscal resources. And for some countries, it will also mean the need for some external support, external financial assistance. And the Fund stands ready to consider requests for financial assistance, either on an emergency basis or in the context of existing programs or, again, in coordination with other agencies and international organizations.

Ms. Saber: OK. So we will now take a question from Weier Ge from Yicai.

Questioner: Thank you. My question is about inflation. So with geopolitical tensions, surging oil prices, and COVID still as a threat to the world economic recovery, and also the ongoing supply chain disruptions‑‑so many challenges‑‑so to what extent are you worried about U.S. inflation echoing what happened in the 1970s? And what is your suggestion for central bank bankers to avoid the economic slowdown as a result of monetary tightening? Thank you.

Mr. Gourinchas: Well, thank you for this question. It is a very important issue, especially for the U.S. but also more broadly, because what happens with U.S. monetary policy reverberates around the world.

So here, what I would point out first is that inflation pressures had started well before the war in the U.S. Inflation was already elevated. It was already becoming broader and not just concentrated on energy and food prices. And the Federal Reserve had already started to bring forward its monetary policy tightening even before February 24.

Now, the war sort of adds another layer to these inflation pressures and makes the rate‑hiking cycle that the Fed has announced even more urgent and necessary.

And the reason for this is, there is a need to check the cycle of increasing prices feeding into wages and feeding into expected inflation and then this raising prices. And then this is what we call these wage‑price dynamics. So we view the response of the Fed as appropriate.

I want to sort of emphasize a few differences between the situation we are in right now and the one we had in the 1970s. That is a parallel that many people have made because, of course, inflation has not been as high in the U.S. since that period. So, of course, people are drawn to this comparison. But there are a number of important differences.

First, if you look at the increase in the price of oil, for instance, in real terms, it is much smaller now than it was in the 1970s, so adjusted for inflation between then and now.

And, second, the U.S. economy and many other economies are also more diversified in terms of their energy sources now than they were in the 1970s. There are renewables. There is gas. There is nuclear. So the economy is less dependent on oil as the main source of energy.

And, third, institutional factors are also different. We have much less wage and price indexation in the economy, by which wages would automatically adjust with the past rate of inflation. And that makes it easier to make sure that inflation in the future is going to sort of come back down to whatever is the central bank target.

Lastly, central banks have accumulated a fair amount of credibility in terms of maintaining price stability over the last 40 years that they did not have back in the 1970s. So we are starting from a very different point. Nevertheless, inflation is a serious concern right now in the U.S. and in other countries. And the risk that inflation pressures remain elevated, that inflation expectations start moving up away from the central bank targets of 2 percent is something that would call for much more forceful action in the future.

Ms. Saber: Great. Thank you. So we will continue with WebEx. We have a question from Rafael Balago from Folha de S.Paulo

Questioner: Hi. Good morning. I wanted to ask you to say a little bit more about the perspectives on Brazil and Latin America. Also, how the presidential election this year in Brazil could affect the numbers in economy, investments in the country. Thank you.

Mr. Gourinchas: Well, thank you.

I think Brazil is a country that has actually had one of the lowest numbers in terms of our growth projections here for the region, about I think 0.8 percent. And that is mostly coming on the back of a fairly aggressive tightening cycle on the part of the Central Bank of Brazil to contain price pressures that were rising.

Now, at the same time, Brazil is an oil‑exporting country, and so it is benefiting from the increase in oil and energy prices. So actually, for Brazil, our revision is to the upside.

But let me turn it over to Petya maybe to provide some details.

Ms. Koeva Brooks: Yes, we do have an upward revision for this year of 0.5. And that is very much because of the support that the economy is getting from the positive terms of trade shock of the higher commodity prices. So the direct links in terms of the impact of the war, the direct links with Russia and Ukraine are fairly limited. So, again, it is really the commodity prices, as well as the tightening in financial conditions which are expected to have an impact on the Brazilian economy.

We do not comment on political developments; but as a general statement, I think election uncertainty, any type of political uncertainty is something that is not a positive factor for growth.

Ms. Saber: Great. Thank you. So we are going to stick with questions on Latin America. We have a question on the Press Center from Yolanda Morales from El Economista asking: Can you give us the IMF outlook for Mexico?

Mr. Gourinchas: Let me turn to Petya maybe.

Ms. Koeva Brooks: Sure. So the Mexican economy is expected to grow by about 2 percent this year, which is a downgrade of about 0.8, relative to what we had back in January. And the reasons for this reduction are mainly the weaker‑than‑expected outturns that we had seen even prior to the war, but also just the significantly lower external demand that we are expecting in this forecast round, in particular, the growth downgrade in the U.S.

Now, in terms of the impact of the war, again, the higher commodity prices and the impact of that on inflation is one of the main channels through which we expect to see the effect on the Mexican economy.

Ms. Saber: Great. Thank you. Now we will turn back to WebEx. We have a question from Nume Ekeghe.

Questioner: Hi. Good afternoon. My name is Nume Ekeghe.

My question is specifically on Nigeria. The report really showed an upward review on Nigeria's growth projections. Could you tell me, what were the factors considered in this upward review? Also, it mentions that oil increase played a part in this. Would you also tell me how ‑‑ (audio distortion) ‑‑ was considered? Thank you.

Mr. Gourinchas: I am not sure I caught the end of your question, but I think I got the beginning, about Nigeria's growth prospects. And here, I think more generally in the region, there is an an enormous amount of heterogeneity between oil and energy producers and oil and energy importers and food importers as well. And Nigeria is an energy producer and exporter, and I think that explains a good part of the upward revision in our growth projections.

But let me turn it over to Malhar on Nigeria.

Mr. Nabar: Sure, Pierre‑Olivier. As you mentioned, this heterogeneity is a key factor here. If you look at the global revisions that we have, we have 86 percent of the global economy revising down in this round. Nigeria is one of the few that is actually revised up. And there are two main factors. One is what you mentioned, the increased oil price, which represents a favorable terms of trade effect for Nigeria, will increase oil production, oil exports. And then the second factor is momentum, the strong momentum that we saw in the non‑oil sector, part of the economy. And I think this was what the question was about, that we missed here. But I think that is what you were asking about. The non‑oil sector of the economy is also showing strong momentum going into the year, which helped lift the outcome growth forecast that we have for Nigeria to 3.4 percent for this year and to 3.1 percent for next year. And that is a 0.7 percentage point increase for this year and a 0.4 percentage point increase for next year.

Ms. Saber: Great. Thank you. So we will continue with WebEx. We have a question from Chudakov Anton from TASS agency. I think you are muted, Anton. I still cannot hear you. We will get back to you.

We will take a question from the Press Center and get back to Anton. This one is from The Africa Bazaar, from Kemi Osukoya. She wants to ask about the economic outlook for sub‑Saharan Africa. The continent is experiencing trifecta effects, driven by the pandemic, climate change, and war‑induced commodity price increases. Can you talk about some of the specific countries these impact the most that you are looking at? Which countries are the most at risk?

Mr. Gourinchas: Well, it is true that, for sub‑Saharan Africa, the region as a whole was rebounding somewhat from the pandemic when the war happened and energy and food prices increased substantially, and that is having a very large impact on the region. As I have mentioned, for poorer households or poorer countries, food and energy price represent a very sizable share of the consumption basket and, therefore, there are many, many vulnerable households, many vulnerable people there.

In terms of which countries might be more vulnerable, then, of course, we would expect oil and energy importers to be the most vulnerable. We would expect countries that have already elevated debt levels or that have high levels of gross financing needs and, therefore, limited space to provide support to the population to be more vulnerable and might need some external assistance or might need some restructuring of their sovereign debt.

Malhar, did you want to add something to that?

Mr. Nabar: I think that covers the broader picture of the outlook. Perhaps just to add that of the 35 low‑income countries in the region, close to 20 are in debt distress or at high risk of debt distress. That really underscores the importance of what you were mentioning, Pierre‑Olivier, about expediting the process with the Common Framework, to ensure that this does not become a widespread systemic event.

Ms. Saber: Great. Thank you. So we have the question from Chudakov Anton, from TASS, so I will read it. He was asking: How particularly western sanctions against Moscow impact the global economy? And how do you assess the actions of the Russian authorities to mitigate the impact of these sanctions?

Mr. Gourinchas: Well, the war and the sanctions are having a very large impact on the global economy. They are the main factor contributing to our overall downward revision here ahead of other forces, like the slowdown in China or a faster tightening of monetary policy in advanced economies. So, certainly, this is having an effect through energy and commodity prices, through trade linkages affecting close trading partners. So the European economies are affected through their energy trade links to Russia, through remittances for countries in the Caucasus and Central Asia or through the refugee crisis. Through all these channels, the war and the sanctions are having a very large impact.

The sanctions are having a very large impact on Russia, itself, as well. We are projecting that output growth will be negative 8.5 percent in 2022. That is an 11.5 percentage point downward revision in our projection for Russia, and that is a very significant impact. This impact could even become larger if the sanctions are tightened further. Again, if I make a reference to our adverse scenario analysis, in that scenario, the sanctions are tightened further and affect energy trade, energy exports from Russia. And under that adverse scenario analysis, the impact on Russia's output is a further decline of 17 percent in terms of the level of output by year‑end 2023. So the sanctions already have a very significant impact on the Russian economy, and they could have an even larger impact if they are tightened further.

Now, it is true that the Russian authorities have put in place measures to mitigate the impact of these sanctions. One of these measures is to implement fiscal support. They have also contained‑‑somewhat successfully, they have contained any financial collapse internally in making sure that the banking system remains afoot, and there have not been any major bank failures or bank failures inside Russia. So the authorities are responding to try to stabilize their economy in a very adverse environment.

Ms. Saber: Great. Thank you.

So I believe that is all the time we have for this morning's press conference. I would like to thank Pierre‑Olivier, Petya, and Malhar for their participation this morning, as well as all of you for joining in and sending us your questions.

For more information on the World Economic Outlook, you can visit our website at And we hope you can stay tuned this morning because at 10:30 a.m.‑‑that is eastern time‑‑we will have the press conference on the Global Financial Stability Report.

With that, we thank you again for watching. Good‑bye.

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