Global economy faces 'its biggest test' since WWII, IMF warns in Davos

How is the economic contraction in the US explained?

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Davos, Switzerland (CNN Business) --

The global economy is being pushed to the brink by one crisis after another.

As the first in-person World Economic Forum since 2020 opened in Davos, Switzerland, on Monday, the International Monetary Fund (IMF) said the economy faces "perhaps its biggest test since World War II."

"We are facing a potential confluence of calamities," IMF Managing Director Kristalina Georgieva said in a statement.

• 4 reasons why the economy seems to be falling apart and what to do about it

The costs of war

He warned that Russia's invasion of Ukraine has "exacerbated" the effects of the Covid-19 pandemic, weighing on the economic recovery and fueling inflation as the cost of food and fuel rises.

Rising interest rates put pressure on countries, companies and households with large amounts of debt.

Market turbulence and ongoing supply chain constraints also pose a risk.

And then there is climate change.

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Climate change is one of the many crises that threaten the world economy, warned the IMF.

concern about the economy

To limit economic stress, the IMF has called government officials and business leaders to meet in Davos to discuss lowering trade barriers.

• Covid-19 has hit China's economy harder than expected

But as countries grapple with growing dismay over the cost-of-living crisis, some are going in the opposite direction, implementing restrictions on the trade of food and agricultural products that may exacerbate shortages and drive up prices globally.

Earlier this month, India's decision to ban wheat exports sent wheat prices skyrocketing, even though it is a relatively small exporter.

Indonesia banned most palm oil exports in April to protect domestic supplies, but will lift the ban this week.

Davos Forum