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Wednesday, March 9, 2022
The Global Economic Fallout of the Ukraine Invasion
A remote risk to the global
economic outlook has now become reality: Russia has invaded its
neighbor Ukraine. The response of countries and multi-national
businesses to Russia’s aggression has been swift in the form of
sanctions, divestment, and halting of business activities. While the
tragic loss of life has been limited to within Ukraine, the broader
economic fallout will have implications around the world.
Five simultaneous shocks to the global economy from the Russia-Ukraine
conflict could notably curb prospects for GDP growth. The shocks
include sudden, and potentially sustained, spikes in 1) energy prices,
2) food commodity prices, and 3) metals prices; 4) recessions in both
Russia and the Ukraine; and 5) intensification of existing bottlenecks
in global supply chains for intermediate goods. While the severity of
these shocks are presently unknowable, The Conference Board has
generated three possible scenarios for what may lie ahead.
Scenario 1 includes oil prices averaging US$105 per barrel in Q2 2022
before gradually falling; Scenario 2 includes oil prices averaging
US$125 per barrel in Q2 2022 before gradually falling; and Scenario 3
includes oil prices averaging US$150 per barrel in Q2 2022 before
gradually falling. All three scenarios result in headwinds to global
economic growth in 2022 that range from -0.4 percentage points to -0.9
percentage points. However, these potential drags on economic growth
vary from economy to economy.
Stay Informed
The
Conference Board Economy, Strategy & Finance Chart of the Week. The Conference Board is uniquely
positioned to provide the C-Suite with a 360° view of implications for
business and insights on what’s ahead related to the global
economy. Visit this page often as new resources
are being added to help you effectively and confidently navigate key
markets around the world.
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