Russian invasion in Ukraine
For those, who don’t know, on 24th of February 2022 Russia fully invaded Ukraine, causing a worldwide shock. So far, a conflict is really sophisticated, and even so Ukraine makes some progress, there are many victims, lots of people fled the country and the damage is enormous.
Impact on World Economy
Before Russia invaded Ukraine, projections estimated global economic growth in 2022 would be around 5 percent. The war in Ukraine was a “massive and historic energy shock” to the markets, according to a November 2022 report by the OECD. The “shock” of the war was one of the main factors that had slowed economic growth in 2022 to just 3.1 percent, and why the OECD projected it to slow to 2.2 percent in 2023. The war, the report found, has had the greatest impact on Europe’s economy, where growth in 2023 is projected to be just 0.3 percent.
A massive investment in Ukraine
In September 2022, the World Bank estimated that the cost of rebuilding Ukraine would be about $349 billion, a number that is larger than Ukraine’s pre-invasion GDP and three-times greater than all the military, humanitarian, and financial assistance commitments to Ukraine since the start of the war, and is certainly much higher now.
Ukraine demands reparations, which seem unlikely to occur; instead, Russia appears to be preparing for a longer and larger-scale conflict. As of June 2022, the allies had seized $30 billion in assets owned by the Russian elite and frozen $300 billion owned by the Russian central bank. It may be possible to transfer some of this to Ukraine, but the law on doing so needs to be explored, and the amounts involved would remain short of what is or will be necessary. Whether Ukraine and its Western allies will ever be able to compel Russia to pay reparations will depend on the outcome of the war.
The United States has so far given the most—$47.9 billion—to Ukraine, but nearly all of it has been given in military and humanitarian aid, while EU countries have provided the largest amount of financial assistance. As a percentage of a giving nation’s GDP, between January and November 2022, the United States devoted 0.23 percent; Estonia and Latvia each devoted roughly one percent; Poland provided 0.5 percent.
Personal opinion
At first, many experts were scared of the impact of war on world economy, because Russia was one of the biggest exporters of fossil fuels worldwide. There are still some experts, who are inclined to think this way, but I strongly disagree with them, as for today we have 14th October 2023, and so far almost all countries stopped their connections with Russia, legal at least. Today’s world successfully looks for alternative ways to avoid working with Russia. Of course, I understand that inflation all around the world, especially in Ukraine, is tremendous and will be even higher, but we will manage it out and for that our most important task should be to help Ukraine win this war. The world shouldn’t stop helping Ukraine, despite all difficulties and after Ukraine’s victory, I’m sure that in future perspective Ukraine will return everything and the connection between Ukraine and the world will be unbreakable. For now, the main goal is to make everything, as it should be.
Sources
- https://www.rand.org/blog/2023/03/consequences-of-the-war-in-ukraine-the-economic-fallout.html
- Image: https://lloydslist.com/LL1140349/Impact-of-war-on-G7-likely-to-be-minimal-compared-with-economic-hit-facing-Russia