Putin’s invasion is seen to inflict real damage on global macroeconomic performance. The US Federal Reserve (Fed) estimated in May 2022 that geopolitical risks arising from the war would see global GDP fall by 1.5% y-o-y and global inflation rise by 1.3% y-o-y. The OECD projects US$280 trillion ($367 trillion) in lost output due to the War by the end of 2023.
Like the first shot of the American Revolution, the first shot of the war in Ukraine was heard around the world. Despite ostensibly being a local conflict between two states, the sudden reappearance of an old-style “War of Conquest” has harmed the global economy. The International Monetary Fund says that further escalation could disrupt energy and food markets and cause further fragmentation of the global economy.
“The war is affecting the global economy via higher commodity prices, supply-chain disruptions and Russia’s weaponisation of energy supplies. This situation will persist throughout 2023 (and probably beyond), as we expect the war to become a protracted conflict,” notes a January report by the Economist Intelligence Unit (EIU).
