Research Briefing | Feb 15, 2022

Limited Ukraine incursion would dampen the recovery in the Eurozone

The impact of a “limited” incursion by Russia into Ukraine would deal an unwelcome blow to the European economy via higher inflation squeezing real incomes, but it would be far from a knockout.

What you will learn:

  • Using our Global Economic Model, we estimate the impact of the heightened tensions would lower eurozone GDP by 0.3% by end-2022, and push inflation up 0.7ppts.
  • Russia would also suffer – its GDP would be 0.6% lower at end-2022, as weaker investment offset gains from higher commodity prices.
  • Although tensions have ratcheted up recently, we still believe that military action on a larger scale is unlikely considering the social and economic costs.
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