Economic Consequences and Implications of the Ukraine-Russia War

Abstract

Since the end of the Cold War, the sanctions against Russia have been the harshest and most costly imposed on a major economy. They appear to be unprecedented in terms of speed, breadth, and global coordination. The latest situation heightens the sense of danger that comes with cross-border financial and operational vulnerability. Even if future oil and gas embargoes are imposed, the economy of Russia will rest on its current export strategy, which may be tough to weaken. The important factors to take into account at the onset of the war are the opportunity cost of military investment, the humanitarian loss of the financial system, and the burden of repairing post-war damage. In this paper we review the economic impact of war, and discuss the potential implications of the Russia Ukraine war on the local and global economies. Overall, there are human costs of war along with the economic influences like building, devastation, inflation, limitation of services debt increase, and daily economic life.

A Geopolitical War in Europe: Russia’s Invasion of Ukraine and its Implications

“…35 Although wars, tensions and military confrontations drastically reduce the trade among the states involved through sanctions and embargoes, it starts to revive immediately after the ceasefire, and the trade and economy starts to recover. 36 The ongoing Russia-Ukraine war dramatically altered the trade of oil, energy, and raw materials, which instigated hesitation in western consumers. 37 The increasing number of sanctions has impacted the global supply chain significantly, which is vesting the post-war damages.…”

War psychology: The global carbon emissions impact of the Ukraine-Russia conflict

“…Wars have had far-reaching effects on the natural world, the economy and monetary system, international commerce and progress, and people's lives everywhere. In the form of increased costs, unsustainable economic growth and development, and enduring fluctuations in the financial and macroeconomic cycle, trading partners and adjacent countries also feel uncertain due to the geographic and conflict risks that extend across the region (Khudaykulova et al, 2022). According to Orhan (Orhan, 2022), Russia's 2014 involvement in Ukraine was a response to the country's escalating crisis brought on by its decision to strengthen ties with the European Union and the North Atlantic Treaty Organization (NATO), both of which are in the interest of Russia's inner circle.…”

News-based sentiment: can it explain market performance before and after the Russia–Ukraine conflict?

“…After the beginning of the war, studies have come out to identify its effects on the global financial market (Boubaker et al, 2022;Mbah and Wasum, 2022;Liadze et al, 2022;Khudaykulova et al, 2022;Lo et al, 2022;Yousaf et al, 2022;Sun et al, 2022). For example, the work of Boubaker et al (2022) suggests that the war generated negative cumulative abnormal returns for global stock market indices but with heterogeneous effects where North Atlantic Treaty Organization (NATO) countries' markets exhibited higher returns.…”