Russia’s full-scale invasion of Ukraine is accompanied by economic consequences around the world – this year alone, the war reduced the forecast of world GDP by $1 trillion.
This, referring to their own calculations, reports The Economist. According to The Economist Intelligence Unit’s (EIU) World Economic Outlook on February 15, global GDP should have grown by 3.9% in 2022 after a jump in 2021. But just nine days after its publication, a big war broke out.
The economic consequences of the Russian invasion are being felt around the world: inflation has skyrocketed, supply chains have been disrupted, and global commodity prices have skyrocketed.
According to the latest forecasts, the war will last at least until the end of the year. As a result, the global growth forecast worsened to 2.8% year on year, or 1.1 percentage points. In simple terms, the war reduced the world GDP forecast by $1 trillion.
Other organizations predict a similar shock. The IMF, for example, cut its global growth forecast by 1.2 percentage points from 3.2% in January.
The economy of Russia, which is under sanctions, will suffer more than other G20 countries: compared with the initial growth forecast of 2.6%, the Russian economy will fall by 10%. What can we say about Ukraine, on whose territory the war is blazing – in April the World Bank predicted a contraction of the Ukrainian economy by 45%. True, the National Bank of Ukraine is more optimistic, reducing the rate of GDP decline by 33.4% at the end of the year.
GDP forecasts deteriorated for 15 G20 countries. For example, for Germany – by two percentage points from the initial figure, to 1.3%. This is due, first of all, to the disruption of supply chains and the country’s heavy dependence on energy from Russia. Germany’s projected growth rate is the second-lowest among the G20, behind only Russia.
But there are countries that, on the contrary, will be able to increase their growth rates. For example, Saudi Arabia’s revised forecast rose by three percentage points to 7.5%, the highest in the G20. Its oil revenues have risen sharply, thanks to rising commodity prices.
Annual growth forecasts for Argentina and Brazil, the largest grain producers in Latin America, also rose by 1.3 and 1.2 percentage points, respectively. Still, the forecasts are generally disappointing – global growth is expected to slow down even more next year.