Russia's war on Ukraine is set to have severe economic consequences for Europe, coming at a time when economic recovery from the coronavirus pandemic was incomplete, the International Monetary Fund (IMF) said in a report on Friday.
"Large increases in commodity prices and compounded supply-side disruptions will further fuel inflation and cut into households' incomes and firms' profits," said the report, titled Regional Economic Outlook for Europe.
"Inflation is projected to hit a multi-decade high in many countries. And new risks loom from escalating fighting and disruptions to critical energy flows," it added.
The IMF concerns come on the back of Turkey's Treasury and Finance Minister Nureddin Nebati making a similar warning in March in the case of a protracted war.
The IMF said European policymakers' main challenges are caring for refugees, helping vulnerable households and companies that try to cope with higher spending on energy, and improving energy security.
"The war and its aftermath will also add to the structural challenges facing post-pandemic Europe. In Ukraine, social and economic infrastructure destroyed by the war will need to be rebuilt, which will require large financing flows from donors," it added.
The Russia-Ukraine war, which started on Feb. 24, has drawn international outrage, with the European Union, United States, and the United Kingdom, among others in the West, implementing tough financial sanctions on Moscow.
