Now, it’s about a year to complete for (Russia invaded Ukraine) the war between Ukraine & Russia which actually began in 2014.
The organization for Economic Cooperation and Development (OECD) is an association of the world’s richest countries. Its head office is in Paris. According to it, the war that Russia waged on Ukraine to change the map of Europe has cost the global economy about $2.8 trillion dollars. The cost of this war is more than the national income of 80% of the world’s countries. India’s national income is currently estimated at around $3 trillion dollars. So, the Russia-Ukraine war has cost the world as much as the total national income of India.
Russia has raised fuel prices intolerable. Which has damaged the domestic budget of all the families of the world. Russia is not yet ready to back down, so the extent of the damage to global growth remains a matter of conjecture.
Before Russia’s invasion of Ukraine, global economic growth was estimated at 4.5% in 2022 and 3.2% in 2023. This growth rate is three to four times the rate at which the world’s population is growing, but now that estimate has been reduced to 2.2% for 2023.
OECD states that the income of the world for the last 2 years will decrease to the amount of the gross national income of France for 2 years. Since the institute is in Paris, it is natural to compare it with France. If we look at it from India’s perspective, India’s income is more than France’s gross national income. The growth rate of the Eurozone countries will be only 0.3% in 2023 and Germany, which is heavily dependent on Russian gas, is not likely to increase its income but instead it will decrease by 0.7%.
Even if Crude prices rise to 50% above current levels, the global economic growth rate can only achieve 1.7%. The OECD did not exclude America either. In 2023, the US economic growth rate was estimated at 1.2%, it will now decrease to only 0.5%. India is a developing country, so even with a downward projection, India’s economic growth is likely to remain above 6%.
At one time, China was the world’s leader for its high economic growth rate, but it has imposed such a strict lockdown against Corona that its growth rate for 2022, which was increased by 4.4% by the OECD, has been reduced to 3.2% and 4.7% for the next year 2023.
Stock markets had started off 2022 on a good note as economies recovered from the Covid pandemic and companies posted healthy results. But the war has brought volatility to the markets while Moscow’s stock exchange remained closed for three weeks. Western sanctions have paralyzed the Russian Banking sector and financial system. Russia’s $300 billion foreign currency reserves held abroad is freezed.
The conflict between the two countries is holistically adversely affecting the world economy. Disturbance in food chain supply may cause droughts in Africa, Fuel-Gas crisis in Europe and plethora of difficulties for the Ukraine people. While such a war situation arises, then we realize the effectiveness of world organizations like UN, NATO who are working for peace settlement in the world as they too become helpless. People are doing their best charity in their personal life but the world is heading towards an economic crisis while countless lives are being lost. It’s still a pause; ahead ‘comma’ or ‘full stop’ that no one knows. Even if the war stopped today, the consequences would be felt for longer through commodity prices.
The author has a rich experience of 10 years of handling and leading various projects. He is an independent freelancer associated with Academic Institutions and Social Organizations. He can be mailed at kalpeshsavan@gmail.com
