The impact of the war in Ukraine on the economy

Russia’s invasion of Ukraine caused a shock in both supply and demand, which is now affecting the world economy and financial markets. Disruptions in Russian, Ukrainian and Belarusian production and distribution of energy, food and industrial metals are already driving up the prices of many commodities, partly driven by the real shortage of supply in the face of limited stocks, but exacerbated by panic or from speculative purchases.

Moreover, the heavy sanctions on Russia are aimed at inflicting damage on its economy, but they inevitably also have repercussions on the global economy, and on the European and Italian ones in particular. The sanctions on the Russian Central Bank and on the SWIFT also impact on the entire international finance and in the future cast doubts on the monetary hegemony of the dollar.

What are Western sanctions and who do they affect? Are they really biting into the Russian economy? What are the risks of a ‘boomerang’ effect on our economies already tested by the pandemic and by the increase in prices (energy and otherwise)? Who risks the most and why?

The International Monetary Fund has revised down its estimates for world growth. The Institute estimates that the Ukrainian economy will contract by 35% in 2022 and reports that Russia’s outlook remains gloomy, but the conflict will have global repercussions on each one of the European countries, also due to their dependence on Moscow for gas.