Implications of the russian armed aggression for the Global Economy

Russia’s armed aggression already has far-reaching consequences not only for the Ukrainian people and the domestic economy, but also for the international community and individual countries.

We recommend that you read the reports published in the Open Knowledge Repository of the World Bank (worldbank.org) on the impact of the war in Ukraine for the global economy, global trade and investment.

Executive Summary:
The war in Ukraine is causing an enormous humanitarian crisis. More than 12 million people are estimated to have been displaced and more than 13 million need urgent humanitarian assistance. Ukraine’s economy is being devastated. Trauma suffered by the population will have enduring consequences. The war is triggering global ripple effects through multiple channels, including commodity markets, trade, financial flows, displaced people, and market confidence. In the surrounding region, a large wave of refugees will put pressure on basic services. Disruptions to regional supply chains and financial networks, as well as heightened investor risk perceptions, will weaken regional growt.

 

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Executive Summary:
The war in Ukraine is a human tragedy for the people of Ukraine, but its economic implications are global. This instant report focuses on the direct impact of the war on world trade and investment. It identifies five trade and investment channels through which countries will be affected by the war in Ukraine. These encompass disruptions to:
(i) commodity markets (especially food and energy),
(ii) logistic networks,
(iii) supply chains,
(iv) foreign direct investment,
(v) specific sectors.
The report finds that world trade will drop by 1 percent, lowering global GDP by 0.7 percent and GDP of low-income countries by 1 percent. Beyond these direct effects, the war’s long-term implications for global trade and investment will largely depend on how governments respond to the changing geopolitical environment.

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