How the War in Ukraine Affected the Economy: 15 Important Stats and Facts
The ongoing war between Russia and Ukraine, which started on February 24th, 2022, has had a significant impact on the global economy. Russia's economy has been hit by Western sanctions, while Ukraine has seen its currency plunge and its GDP shrink.
Let’s take a look at some statistics regarding the war in Ukraine and how it's affecting the US and the global economy.
War Between Russia and Ukraine - Economic Impact Stats (Editor’s Choice)
- Russia’s economy is expected to experience a 4.2% contraction by the end of 2022.
- The Ukrainian economy is projected to shrink by 32% by the end of 2022.
- The US economy contracted by 1.4% in the first quarter of 2022.
- The Russia-Ukraine war is projected to cost the global economy $2.8 trillion by the end of 2023.
- From January 2022 to March 2022, crude oil prices saw an upsurge of 38% globally.
- The US has sent over $18.2 billion in aid to Ukraine since February 2022.
Effects on the Russian and Ukrainian Economies
First, let’s take a look at the economic impact of the Russia-Ukraine conflict on the two countries in question. We’ll see which country has been affected more, and what’s expected to happen in the future.
Russia’s economy is expected to experience a 4.2% contraction by the end of 2022.
In August 2022, the Economy Ministry of Russia reported that the country’s economy is projected to experience a 4.2% contraction. However, earlier predictions were a lot gloomier. Namely, back in April of the same year, the ministry announced that GDP would shrink by up to 12.4%.
The Ukrainian economy is projected to experience a 32% shrink by the end of 2022.
Ukraine is experiencing significantly higher consequences than Russia in regard to its economy. Namely, the Ukrainian central bank predicts that Ukraine’s GDP could fall by a staggering 32%. That’s a significant difference compared to the 4.2% contraction the Russian economy ministry announced. That said, the war with Ukraine is costing the Russian economy much less.
The annual inflation rate in Russia was at its peak in April 2022, as it totaled 17.8%.
In April 2022, the Russian economy was hit by a huge spike in inflation. To combat the effects this could have on Russian citizens, President Vladimir Putin ordered a 10% increase for pensions and the minimum wage in May 2022. By October 2022, inflation had dropped to 12.6%. The Bank of Russia reported that inflation is expected to return to 4% in 2024.
Ukraine’s annual inflation rate reached 26.6% in October 2022.
In contrast to the inflation Russia has faced, Ukraine’s inflation rate has been on a steady rise throughout the year. Namely, the inflation rate spiked from 10% in January to 16.4% in April, after which it steadily increased and reached 26.6% in October. This is more evidence that the economic impact of Russia invading Ukraine has been more severe for the invaded country.
In September 2022, Russia exported 560,000 fewer oil barrels per day compared to its pre-war exports.
According to the IEA monthly report for October 2022, there has been a significant fall in Russia’s oil export. This is mainly because a number of countries are now refusing to import oil from Russia due to its invasion of Ukraine.
While this has undoubtedly impacted the Russian economy in 2022, other statistics show that the effects are less drastic than what was previously predicted.
In August 2022, Ukraine’s grain exports were down 46%.
The Ukrainian agriculture ministry reported in August 2022 that the country’s exports of grain plummeted by a staggering 46%, i.e., about 2.6 million tons. However, in the coming months, the situation improved drastically. In fact, in the first half of October 2022, Ukraine exported only 2.4% less grain compared to the same period the previous year.
Effects on the US Economy
The fact that the two countries in conflict are experiencing a negative economic impact is no surprise. Now, the question is: How has the Ukraine war affected the economy of the United States?
The US economy contracted by 1.4% in the first quarter of 2022.
According to the BBC, the Commerce Department's reports showed that the US economy shrank by 1.4% in the first three months of 2022. This marks the first economic decline for the US after the fall caused by the global pandemic in 2020.
In contrast, the US economy experienced a 3.4% contraction during the COVID-19 outbreak, which was its biggest fall since 1946.
The US has spent over $18.2 billion to aid Ukraine.
(US Department of Defense)
Ukraine war stats show that, since February 2022, the US has given out $18.2 billion in security assistance to Ukraine. This includes anti-aircraft systems, anti-armor systems, air defense systems, guns, ammunition, and more. Notably, the aid provided to Ukraine by the US totaled approximately $3.3 billion from 2014 up until the start of the war.
The inflation rate in the US rose to 8.1% in 2022.
(International Monetary Fund)
Inflation spikes can be observed around the world, and the US is no exception. According to the International Monetary Fund, in 2020, the inflation rate in the United States was 1.2%, and it saw an increase of almost 7% after the war in Ukraine started.
Effects on the Global Economy
Now that we’ve seen the economic impact of the Russian invasion of Ukraine on the two countries, as well as the United States, let’s take a look at how the war is affecting the rest of the world.
The Russia-Ukraine war is projected to cost the global economy $2.8 trillion by the end of 2023.
(Wall Street Journal)
The Wall Street Journal reported that the Organization for Economic Cooperation and Development announced the prediction that the Ukraine war could cost the global economy a staggering $2.8 trillion by the end of 2023. This is because the conflict has caused a spike in energy prices, food shortages, and disruptions in supply chains.
From January 2022 to March 2022, crude oil prices saw an upsurge of 38% globally.
(World Economic Forum)
According to 2021 stats, Russia is in third place when it comes to the production of crude oil, after the United States and Saudi Arabia. Due to a number of countries placing sanctions on Russia in response to its invasion of Ukraine, they’re forced to acquire oil elsewhere. This growing demand has led to a significant increase in prices.
Shipping costs of dry bulk goods have gone up by almost 60% globally.
(UN Conference on Trade and Development)
In late June 2022, the UN Conference on Trade and Development reported that the price of the shipping of dry bulk goods, such as grains, had soared drastically. Trade in the Black Sea region had been disrupted by the war between Russia and Ukraine, which led to increased vessel demand around the world. This, in turn, led to a rise in shipping costs of nearly 60%, which subsequently caused an increase in the prices of dry goods.
The European Union’s Ukraine war-related costs are expected to amount to €175 billion by the end of 2022.
Russia’s war with Ukraine is costing the EU a substantial amount of money. This is expected to amount to between 1.1% and 1.4% of its GDP by the end of 2022. These costs include security and defense, an energy independence plan to cut off supplies from Russia, welcoming refugees from Ukraine, price increases, and inflation consequences.
The UK economy is expected to come to a standstill in 2023.
(Organization for Economic Cooperation and Development)
The UK’s economic growth is projected to fall to 0% by the end of 2023, according to estimations provided by OECD. That’s a significant fall, given that its economy was expected to grow by 3.4% in 2022. This comes as another step back, as the economy was previously negatively affected by Brexit and the global pandemic.
Remittances in Central Asia are on the path to reaching a 25% decline.
The impact of the Russia-Ukraine war on the global economy can also be observed in Central Asia. In April 2022, Dilip Ratha and Eung Ju Kim predicted in their paper that the amount of money paid in remittances would fall by 25% in Central Asian countries.
These countries, particularly Tajikistan, Kyrgyzstan, and Uzbekistan, rely heavily on remittances from Russia. The war comes as a huge blow to their economies. For instance, data from the World Bank shows that 31.1% of Kyrgyzstan’s GDP came from remittances in 2020.
In conclusion, it’s clear that the war between Ukraine and Russia has had a notable impact on world economies and financial markets. From rising inflation rates to disrupted global supply chains that led to skyrocketing prices, many countries have been affected by the conflict in a significant way.
A number of central banks have started tightening their monetary policies in an attempt to ease the consequences of high inflation. However, this is unlikely to solve the issue, due to the increase in prices of crude oil and natural gas.
It’s unknown how long the crisis is going to last, but predictions indicate that the situation is improving in some countries, while others, like the UK, will continue feeling the impacts well into 2023.
How is Russia's economy doing now in 2022?
As of November 2022, Russia’s economy is doing better than what was initially predicted. However, that’s not to say that it hasn’t been affected at all. Russia’s GDP is expected to shrink by 4.2% by the end of 2022. What’s more, the country’s crude oil exports were down by 560,000 barrels per day in September 2022.
How does Russia invading Ukraine affect the world?
Russia’s war against Ukraine has affected the world economy in a number of ways. For instance, since many countries have imposed sanctions on Russia, they also stopped importing Russian oil, and the increased demand has led to a jump in oil prices.
Why is Ukraine GDP so low?
Russia’s invasion of Ukraine has taken a huge toll on the country’s economy. Ukraine’s GDP is expected to experience a 32% contraction by the end of 2022. This event followed the global pandemic, which also had a huge impact on world economies, including Ukraine.
Which country sent the most aid to Ukraine?
The country that has sent the most aid to Ukraine is the United States. So far, it has given out $18.2 billion in security assistance.
What countries are benefiting from the Ukraine war?
While, generally speaking, the world’s economies are being affected negatively by the war in Ukraine, the sanctions against Russia are benefiting some countries, as they are now becoming the main exporters of certain goods, such as oil, copper, and nickel. Some of these countries include Brazil, India, and Turkey.
Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.
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