Publication: Implications of the War in Ukraine for the Global Economy
Loading...
Date
2022-03-31
ISSN
Published
2022-03-31
Editor(s)
Abstract
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. The damage to Russia’s economy will weigh on remittance flows to many neighboring countries. Disruptions to regional supply chains and financial networks, as well as heightened investor risk perceptions, will weaken regional growth
Link to Data Set
Citation
“Guenette, Justin Damien; Kenworthy, Philip George; Wheeler, Collette Mari. 2022. Implications of the War in Ukraine for the Global Economy. EFI Policy Note;3. © World Bank. http://hdl.handle.net/10986/37372 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication The Past and Future of Regional Potential Growth(World Bank, Washington, DC, 2023-03)Potential growth slowed in most emerging market and developing economy (EMDE) regions in the past decade. The steepest slowdown occurred in the Middle East and North Africa (MNA), followed by East Asia and the Pacific (EAP), although potential growth in EAP remained one of the two highest among EMDE regions, the other being South Asia (SAR), where potential growth remained broadly unchanged. Projections of the fundamental drivers of growth suggest that, without reforms, potential growth in EMDEs will continue to weaken over the remainder of this decade. The slowdown will be most pronounced in EAP and Europe and Central Asia because of slowing labor force growth and weak investment, and least pronounced in Sub-Saharan Africa where the multiple adverse shocks over the past decade are assumed to dissipate going forward. Potential growth in Latin America and the Caribbean, MNA, and SAR is expected to be broadly steady as slowing population growth is offset by strengthening productivity. The projected declines in potential growth are not inevitable. Many EMDEs could lift potential growth by implementing reforms, with policy priorities varying across regions.Publication Adding Fuel to the Fire(World Bank, Washington, DC, 2020-07)The outbreak of COVID-19 and the wide-ranging measures needed to slow its advance triggered an unprecedented collapse in oil demand, a surge in oil inventories, and a record one-month decline in oil prices in March 2020. This paper examines the likely implications of the 2020 oil price plunge for emerging market and developing economies. It presents four main results. First, the record plunge in oil prices was predominantly driven by demand factors as wide-ranging measures to stem the pandemic precipitated an unprecedented collapse in oil demand, but the surge in oil inventories also exerted downward pressure on oil prices. Second, this latest oil price decline was preceded by six previous plunges over the past half-century, during which energy exporters and importers suffered similar initial output losses (about 0.5 percent) that were unwound within three years. Third, the current episode of low oil prices holds limited promise to boost the global economy amid widespread restrictions and narrow room for fiscal support in energy-exporting emerging market and developing economies. Fourth, many emerging market and developing economies entered the current public health crisis with precarious fiscal positions; current low oil prices are thus an opportunity to review energy-pricing policies, including remaining energy subsidies, to mobilize domestic resources.Publication New Tools and New Tests in Comparative Political Economy : The Database of Political Institutions(World Bank, Washington, DC, 2000-02)This paper introduces a large new cross-country database on political institutions: the Database on Political Institutions (DPI). The authors summarize key variables (many of them new), compare this data set with others, and explore the range of issues for which the data should prove invaluable. Among the novel variables they introduce: 1) Several measures of tenure, stability, and checks and balances. 2) Identification of parties with the government coalition or the opposition. 3) Fragmentation of opposition and government parties in legislatures. The authors illustrate the application of DPI variables to several problems in political economy. Stepan and Skach, for example, find that democracy is more likely to survive under parliamentary governments than presidential systems. But this result is not robust to the use of different variables from the DPI, which raises puzzles for future research. Similarly, Roubini and Sachs, find that divided governments in the OECD run higher budget deficits after fiscal shocks. Replication of their work using DPI indicators of divided government indicates otherwise, again suggesting issues for future research. Among questions in political science and economics, that this database may illuminate: the determinants of democratic consolidation, the political conditions for economic reform, the political and institutional roots of corruption, and the elements of appropriate and institutionally sensitive design of economic policy.Publication The Impact of the War in Ukraine on Global Trade and Investment(Washington, DC, 2022)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.Publication Social and Governance Dimensions of Climate Change : Implications for Policy(2009-05-01)This paper addresses two vital concerns in the debate on adaptation to climate change. First, how can countries prepare to manage the impact of climate-change induced natural disasters? Second, how can countries ensure that they have the governmental institutions required to manage the phenomenal challenge of adaptation to climate change? A range of economic and institutional measures are tested for their potential effects on natural disaster resilience and the quality of environmental governance. The findings suggest an important role is played by social and political institutions in determining the ability of countries to adapt to climate change and respond to natural disasters, in particular in the degree to which countries have succeeded in gender empowerment and the development of a robust civil society and nonprofit sector. As the climate change challenge moves from that of "proving the facts" to that of "implementing change," the authors suggest that international policymakers, donors, and activists must increasingly focus on building domestic policy environments that are conducive to the delivery of more effective environmental legislation, for example through implementation of gender quotas and provision of support to civil society groups.
Users also downloaded
Showing related downloaded files
Publication Vietnam(World Bank, Hanoi, 2020-05-01)Following from Vietnam’s ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in late 2018 and its effectiveness from January 2019, and the European Parliament’s recent approval of the European Union-Vietnam Free Trade Agreement (EVFTA) and its subsequent planned ratification by the National Assembly in May 2020, Vietnam has further demonstrated its determination to be a modern, competitive, open economy. As the COVID-19 (Coronavirus) crisis has clearly shown, diversified markets and supply chains will be key in the future global context to managing the risk of disruptions in trade and in supply chains due to changing trade relationships, climate change, natural disasters, and disease outbreaks. In those regards, Vietnam is in a stronger position than most countries in the region. The benefits of globalization are increasingly being debated and questioned. However, in the case of Vietnam, the benefits have been clear in terms of high and consistent economic growth and a large reduction in poverty levels. As Vietnam moves to ratify and implement a new generation of free trade agreements (FTAs), such as the CPTPP and EVFTA, it is important to clearly demonstrate, in a transparent manner, the economic gains and distributional impacts (such as sectoral and poverty) from joining these FTAs. In the meantime, it is crucial to highlight the legal gaps that must be addressed to ensure that national laws and regulations are in compliance with Vietnam’s obligations under these FTAs. Readiness to implement this new generation of FTAs at both the national and subnational level is important to ensure that the country maximizes the full economic benefits in terms of trade and investment. This report explores the issues of globalization and the integration of Vietnam into the global economy, particularly through implementation of the EVFTA.Publication What Does MFN Trade Mean for India and Pakistan? Can MFN be a Panacea?(World Bank, Washington, DC, 2013-06)India and Pakistan, the two largest economies in South Asia, share a common border, culture and history. Despite the benefits of proximity, the two neighbors have barely traded with each other. In 2011, trade with Pakistan accounted for less than half a percent of India's total trade, whereas Pakistan's trade with India was 5.4 percent of its total trade. However, the recent thaw in India-Pakistan trade relations could signal a change. Pakistan has agreed to grant most favored nation status to India. India has already granted most favored nation status to Pakistan. What will be the gains from trade for the two countries? Will they be inclusive? Is most favored nation status a panacea? Should the granting of most favored nation status be accompanied by improvements in trade facilitation, infrastructure, connectivity, and logistics to reap the true benefits of trade and to promote shared prosperity? This paper attempts to answer these questions. It examines alternative scenarios on the gains from trade and it finds that what makes most favored nation status work is the trade facilitation that surrounds it. The results of the general equilibrium simulation indicate Pakistan's most favored nation status to India would generate larger benefits if it were supported by improved connectivity and trade facilitation measures. In other words, gains from trade would be small in the absence of improved connectivity and trade facilitation. The idea of trade facilitation is simple: implement measures to reduce the cost of trading across borders by improving infrastructure, institutions, services, policies, procedures, and market-oriented regulatory systems. The returns can be huge, even with modest resources and limited capacity. The dividends of trade facilitation can be shared by all.Publication Zambia Economic Brief, June 2015, Issue 5(World Bank, Washington, DC, 2015-06-01)After several years of strong economic performance, Zambia now confronts several important challenges that must be managed carefully to ensure sustained and inclusive growth in the future. On the one hand, the economy grew by an estimated 5.5–6.0 percent in 2014, somewhat above the average for African economies. Monthly copper production increased by an average of 8 percent during the second half of 2014, reversing the sharp slide in early 2014. Inflation fell to 7.2 percent in March and April, helped both by falling world oil prices and by the Bank of Zambia’s monetary tightening. In the first half of 2015, the authorities adjusted several key economic policies to respond to serious problems: revising rules on VAT refunds in February, announcing a new mining fiscal regime in April, and raising fuel prices in May so that the government could recover import costs. On the other hand, the kwacha has come under renewed pressure. It lost 17 percent of its value against the U.S. dollar from December 2014 through the end of March 2015. Since then it has recovered somewhat, but foreign exchange markets remain volatile. Interest rates have been rising since September 2014, due in part to increased government borrowing and in part to steps taken by the Bank of Zambia to tighten credit. Over the medium term, growth should hold steady in 2015 and then accelerate to around 6–7 percent per year in 2016–2018. Although inflation is expected to rise towards the end of 2015, it should resume falling in 2016. Low commodity prices, a more stable exchange rate, and adequate local harvests would help contain inflationary pressures and boost real disposable incomes. The resulting pick-up in private consumption, coupled with increasing copper exports, should help strengthen growth prospects.Publication Democratic Republic of Congo Urbanization Review(Washington, DC: World Bank, 2018)The Democratic Republic of Congo has the third largest urban population in sub-Saharan Africa (estimated at 43% in 2016) after South Africa and Nigeria. It is expected to grow at a rate of 4.1% per year, which corresponds to an additional 1 million residents moving to cities every year. If this trend continues, the urban population could double in just 15 years. Thus, with a population of 12 million and a growth rate of 5.1% per year, Kinshasa is poised to become the most populous city in Africa by 2030. Such strong urban growth comes with two main challenges – the need to make cities livable and inclusive by meeting the high demand for social services, infrastructure, education, health, and other basic services; and the need to make cities more productive by addressing the lack of concentrated economic activity. The Urbanization Review of the Democratic Republic of Congo argues that the country is urbanizing at different rates and identifies five regions (East, South, Central, West and Congo Basin) that present specific challenges and opportunities. The Urbanization Review proposes policy options based on three sets of instruments, known as the three 'I's – Institutions, Infrastructures and Interventions – to help each region respond to its specific needs while reaping the benefits of economic agglomeration The Democratic Republic of the Congo is at a crossroads. The recent decline in commodity prices could constitute an opportunity for the country to diversify its economy and invest in the manufacturing sector. Now is an opportune time for Congolese decision-makers to invest in cities that can lead the country's structural transformation and facilitate greater integration with African and global markets. Such action would position the country well on the path to emergence.Publication Namibia: Country Brief(World Bank, 2009)Namibia is a large country in Southern Africa that borders the South Atlantic Ocean, between Angola to the north and South Africa to the south. With a surface area of 824,290 square kilometers, it is similar in size to Mozambique and about half the size of the U.S. state of Alaska. Namibia has a small population of approximately 2.1 million people. It is also one of the least densely populated countries in Sub-Saharan Africa, with an average density of approximately 2.5 people per square kilometer, compared to 34 people per square kilometer for the region as a whole. Namibia was the last colonized country in Sub-Saharan Africa to become independent. After nearly 70 years of South African rule, Namibia gained its independence on March 21, 1990. Until 1990, Namibia's official languages were German, Afrikaans, and English. Following independence, English became the official language, although it is the first language of only a very small percentage of Namibians. Oshiwambo dialects are the mother tongue of approximately half of the population. Namibia, a lower-middle-income country, has one of the highest levels of per capita income in Sub-Saharan Africa. Namibia is one of very few countries in Sub-Saharan Africa that maintains a social safety net for the elderly, the disabled, orphans and vulnerable children, and war veterans. It also has a social security act that provides for maternity leave, sick leave, and medical benefits. Namibia has one of the most productive fishing grounds in the world. The fishing industry is an important source of foreign exchange and a significant employer. The tourism industry in Namibia is similar in size to that in Botswana and is the country's third-largest foreign exchange earner. Namibia is one of the largest producers of gem quality diamonds in the world. It is estimated that 98 percent of its mined diamonds are gem quality. In 2006, almost half of total production was recovered from offshore sources. Namibia is the driest country in Sub-Saharan Africa, with deserts occupying much of the country. It has no perennial rivers or any other permanent water bodies. Due to the low and erratic rainfall and scarce ground and surface water, less than five percent of the country is arable, including through irrigation. Namibia was the first country in the world to incorporate environmental protection into its constitution. Nearly six percent of its land is nationally protected, including large portions of coastal areas within the Namib Desert.