How Russia’s war against Ukraine makes the world poorer: 10 facts and forecasts
- Alexey Kalmykov
- BBC
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Russia’s attack on Ukraine has prevented inflammation from recovering from the COVID-19 upsurge and returning to previous growth rates. Missed opportunities are estimated at no less than $1 trillion this year alone. The poorer countries suffer more than others, including two economists adhering to international institutions who warned in this territory.
In their semi-annual forecasts, banks and clubs of profitable OECD countries react to recent optimistic views on the prospects for the global economy and make a new diagnosis: one can lose the quick appearance, and the risks inevitably arise in the next crisis, as they have never been real and high.
“The world will pay a high price for the war against Russia. story in the OECD report. “Obviously, the poorest countries are suffering the most.”
“The Russian invasion of Ukraine has damaged the global economy, destabilized energy markets, exacerbated food shortages and poverty in many countries,” the authors economists at the World Bank.
Two reports have over 400 pages of text and tables. We read them and selected 10 facts and predictionsThe cures, like the Russian invasion of Ukraine, have made the world poorer than everyone expected six months ago, when separate, already post-COVID, but still pre-war assessments were revealed.
1. The cost of war
The World Bank now expects the global economy to expand by just 2.9% in 2022, up from the previous forecast of 4.1%. The OECD cut its forecast even more significantly – to 3% from 4.5%.
Forgone percent – one and a half – a gigantic amount, given that global GDP this year should exceed 100 trillion dollars of growth per year.
In addition to the war, growth is hampered by the endless covid quarantine in China and the increase in lending rates in European countries to limit record inflation, from blocking everything by the same Russian aggression.
The world economy is cyclical: boom follows recession, recovery to another recession, and so on. Since World War II, the world has experienced half a dozen recessions, including the 2020 covid one.
But never has the recovery from the fall stumbled as quickly as it is now. The main reason is Russia’s attack on Ukraine.
So far we are talking about braking, and not about a new recession. But if it comes to a recession, a new record will be recorded in the history of the world economy – the world has not known such a short period of wealth growth before a new recession for more than 80 years.
2. The poor will suffer more than the rich
Developing countries are rising in poverty as a result of rising economic growth around the world, as they have fewer inventories and greater dependence on world food and energy prices, as well as interest in foreign currency loans to buy food, fuel, technology and equipment. Russia’s attack on Ukraine hit just at them.
The consequences of the war in Ukraine only exacerbate these problems. it will be very difficult to avoid a recession,” World Bank economists warn.
“Special concern about wheat exports from Russia and Ukraine, which may seem like a massive food shortage in developing countries.
3. Russia, Ukraine and their neighbors will take the brunt
Europe and Central Asia are on a near-docian growth trajectory in early 2022. But Putin’s army crossed the Ukrainian consignment here.
“The Russian invasion has reversed this recovery, and in 2022 the region’s economy will shrink by about 3%,” writes the World Bank, which back in January was expecting not a recession, but growth of 3%.
The recession does not threaten everyone, but only Russia, Ukraine and 4 other countries of the former USSR: Belarus, Moldova, Kyrgyzstan and Tajikistan, the World Bank believes.
GDP in Ukraine, according to his calculations, will shrink by 45% in 2022 and will not recover soon.
“The consequences of the war will be felt far beyond the short-term forecast.
Russia’s GDP, according to their calculations, will decline by about 9% and even next year is not expected to grow, but will decrease by about 2% more in the context of the European oil embargo and income, consumption, investment and imports.
This is what the World Bank thinks. The OECD does not give forecasts for Russia and Ukraine, because this is a club of rich countries. Russia’s plans have something to do with it (Putin is expected by 2014) have firmly passed into the category of fantasies after the annexation of Crimea 8 years ago.
4. Ukrainian refugees will cost Europe dearly
More precisely, 26 billion euros in 2022 alone, the OECD has calculated.
Two-thirds of this amount is the direct costs of reception and accommodation. About 9 billion more euros in addition to financing education and health care.
There are already more than 5 million Ukrainian accelerations in the EU.
“The war in Ukraine has resulted in a population outreach on a historic scale not seen since World War II.
5. Refugees from Ukraine (and Russia) are not only a cost to Europe
These ecosystems of the EU and other developed Western countries partially compensate for the lack of labor force – one of the main brakes on the recovery of the global economy after the pandemic.
“The influx of Ukrainian boosts and conditions, especially educated and skilled workers, is likely to have a positive effect on domestic demand and, in the medium term, on economic growth due to the growth of the working population,” – US World Bank.
“Normalization of the labor market in 2022-2023, despite the negative consequences of the war in Ukraine,” write OECD economists. strength.”
6. The war pushed up oil and gas prices (especially in Europe)
Due to exclusion, self-restraint by Western traders, and energy blackmail by Russia, oil has risen in price by almost 4.5 times in significant terms compared to depressed covid prices. The world has not known such a sharp jump since the Eastern oil crisis of the 1970s.
However, only European gas prices reached historical records (without the help of Gazprom). Coal is approaching the peaks of 2008, and oil in manifestations is still much cheaper than in the first place before the historical crisis of the general public.
The result of such high prices and reactions If earlier Russia consumed up to 40% of gas demand, in the covid 2021 this share was consumed up to 35%, now it is already less than 25%.
7. Support approximately 3% of foreign trade
Sanctions and embargoes affected the import and export of not only oil and gas, but everything else.
Restrictions on turnover, insurers and carriers have put roughly 3% of global trade at risk, according to OECD economists.
Of the 4,500 main goods that are responsible for trading in the world, they are interested in those where the share of Russia and Ukraine in the world market exceeds 15%, and receive hundreds of positions that are most vulnerable to interruptions in war conditions.
These are mainly metals, petrochemical products and foodstuffs.
8. The dollar is strengthening. This is a threat to poor countries
In connection with the growth of the dollar, to a greater extent it is associated with an increase in lending rates in the United States, however, the weakness of the euro, the currency of the countries of the continent, on which Russia unleashed a war, is also partly explained.
Travel loans in currency-stable countries are at risk as rising dollar rates increase their spending on external debt refinancing and reduce the need for higher-rate debt exposure in more resilient Western propensities, World Bank.
The OECD lists potential victims by name.
“The share of public debt denominated in foreign currency remains at a high level of 50-70% in Turkey, Bulgaria, France and Argentina. in default Lebanon and Sri Lanka.
9. The fight against climate change is temporarily forgotten
In Europe, dependence on oil, caused by oil emissions from Russia, has sharply decreased. They are based on the replacement of “dirty” coal and natural fuel with a “clean” type of gas, the lion’s share of natural origin.
Now, American and Qatari gas, and even Polish or German coal, have become preferable to Russian fuel.
“Attempts to eliminate emergency sources of energy have turned into a panic search for alternative hydrocarbons and coal consumption. This is at best a temporary solution, as the world needs clean energy sources,” the OECD’s chief economist Laurence Boone wrote in the introduction to the OECD report. .
10. How long will the war last, and when will the arrest be lifted?
Obama’s forecast is based on what their authors think is the most probable assumption that the war in one form or another will last at least a year, and an injunction against Russia and a denial of force.
Both the World Bank and the OECD believe that the European embargo on Russian coal and oil will come into effect, commodity and metal prices will stop rising but will decrease, global trade will continue to be suppressed by logistics problems, and lending rates around the world continue to rise .