Economic costs of the Russia‐Ukraine war

The unprovoked and brutal invasion of Ukraine by Russia on 24 February 2022 is imposing a terrible human cost. In this paper, we use the National Institute Global Econometric Model (NiGEM) to quantify the impact of the war on the global economy. The war represents a massive cost, equivalent to 1% of...

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Bibliographic Details
Published inWorld economy Vol. 46; no. 4; pp. 874 - 886
Main Authors Liadze, Iana, Macchiarelli, Corrado, Mortimer‐Lee, Paul, Sanchez Juanino, Patricia
Format Journal Article
LanguageEnglish
Published Oxford Blackwell Publishing Ltd 01.04.2023
Subjects
Costs
Econometrics
Economic analysis
Food
Foreign exchange rates
GDP
Global economy
Gross Domestic Product
Inflation
Proximity
Purchasing power parity
Russia-Ukraine War
Russia–Ukraine
War
Europe
Ukraine
Russia
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Summary:The unprovoked and brutal invasion of Ukraine by Russia on 24 February 2022 is imposing a terrible human cost. In this paper, we use the National Institute Global Econometric Model (NiGEM) to quantify the impact of the war on the global economy. The war represents a massive cost, equivalent to 1% of global GDP in 2022, or about $1.5 trillion valued at purchasing power parity exchange rates (PPP), compared with our GDP forecast made at the beginning of 2022. Europe is the region affected most, given trade links its proximity to Ukraine and Russia and its reliance on energy and food supplies from those countries. GDP in Europe is expected to shrink by more than 1% in 2022 compared with our forecast at the beginning of 2022. In Western Europe, Germany will be worst affected, followed by France and Italy. GDP in ‘Developing Europe’, where Ukraine is the largest representative, is expected to shrink by 30%. The war will also add about 2% to global inflation in 2022 and 1% in 2023, compared with NIESR's inflation projection at the beginning of 2022.
ISSN:0378-5920
1467-9701
DOI:10.1111/twec.13336