War in Ukraine: challenges for the global economy

Abstract

Introduction. As the attack on Ukraine intensified, the United States and other Western countries imposed unprecedented economic sanctions on Russia and declared their support for Ukraine. Problem. Consideringthe far-reaching impact of the humanitarian crisis in Ukraine on international development in the long run, it is extremely important for the international community to implement compre­hensive solutions focused on development priorities. The aim of the article is to study the impact of the war in Ukraine on inflation risks and challenges for the world economy. Methods. The information base of the study was the study of official information and periodicals. Methodological basis of the research: analysis, synthesis, systems approach, statistical methods and abstract-logical methods. Results. The new sanctions regime and the cost of the war are likely to push the Russian economy into a recession worse than the 1998 recession and the Russian financial crisis, accompanied by significant increases in inflation and the cost of living of Russian households. According to our preliminary estimates, Russia’s real GDP will fall by 4–9 % in 2022, while growth will range from –1 % to 2.5 % in 2023. Inflation may rise to 11–17 % in 2022, fall to 6–12.03 % in 2022. A key factor in these projections is that Russia’s oil and gas exports, especially to Europe, are largely continuing, but this may change if sanctions are tightened. In 2021, Russia’s exports of mineral fuels, oils and distillation products amounted to 199 USDbillion. USA, which accounts for 40.5 % of Russia’s total exports and 11.4 % of its GDP. Depending on the duration of sanctions and the possibility of their strengthening, the world economy may be significantly affected during 2022–2023. Conclusions. It is expected that the war in Ukraine will have a significant impact on the economy and consumers in terms of such actions: expanding the supply chain, increasing inflationary pressures, deteriorating economic prospects.