Research Briefing | Mar 4, 2022

Global economic effects of Russia’s war on Ukraine

Global economic effects of Russia’s war on Ukraine

Our baseline forecast is that the impact of the Russia-Ukraine war will lower overall world GDP by around 0.2% this year, but the impact on each region will vary. The economic consequences are dramatic for Ukraine and Russia, and significant for Europe. But unless there is a serious escalation, the effects on the US, China, and most of the emerging world should be limited.

What you will learn:

  • In Europe, the negative effects will be greater than the global average due to stronger trade links with Russia and Ukraine, and most importantly the large gas price shock triggered by the conflict. But transmission through financial channels should be limited given low exposures to Russia.
  • US financial markets have so far been little affected by the conflict, with stocks and risk premia barely changing. The energy price shock in the US will also be much lower than in Europe.
  • In other emerging markets, the picture is mixed. Higher world energy prices are a boon for some, a problem for others. Exposure to higher global food prices and the shock to financial risk premia also varies.
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