Ukraine war to inflict 'enormous economic repercussions' globally : US treasury secretary

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Janet Yellen (AFP)
Janet Yellen (AFP)

US Treasury Secretary Janet Yellen will warn on Wednesday that the war in Ukraine threatens to inflict "enormous economic repercussions" globally, just as governments impose fresh sanctions on Russia and economists cut growth forecasts.

"Russia’s actions, including the atrocities committed against innocent Ukrainians in Bucha, are reprehensible, represent an unacceptable affront to the rules-based global order, and will have enormous economic repercussions for the world," Yellen will tell the House Financial Services Committee, according to a copy of her prepared remarks.

US, European Union and Group of Seven officials are coordinating new sanctions on Russia, including a US ban on investment in the country and an EU ban on coal imports, following the discovery of civilian murders and other atrocities in Ukrainian towns abandoned by Russian forces. 

Meantime, the International Monetary Fund is preparing to cut its forecasts for global growth, having previously predicted a 4.4% expansion this year. Deutsche Bank AG economists said on Tuesday that they now expect a recession in the U.S. in the next two years. 

Yellen will say the work of international financial institutions like the IMF and World Bank have become more important in the wake of the war.

They "will be critical partners in rebuilding Ukraine, alongside bilateral donors, and they also will provide vital support to neighboring countries welcoming refugees," she will tell lawmakers.

Development banks will also be called upon to help with spillovers from the invasion, including food insecurity, Yellen will say, highlighting the out-sized role Russia and Ukraine play in global wheat exports. 

The institutions can also help build energy security, in shifting countries away from Russian oil and gas and from fossil fuels generally, she will say, according to the remarks.

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