As this article is being written, Vladimir Putin is threatening \u2018more invasions.\u2019 Two British fighters captured in Ukraine have been sentenced to death: the BBC is warning of a possible cholera outbreak in Mariupol and the fighting continues in the Donbas.<\/p>\n
No doubt by the time you read the article the headlines will be different \u2013 but no less depressing. What now seems to be undeniably true \u2013 and accepted by all the military analysts \u2013 is that the war in Ukraine will not be over quickly. Russia invaded Ukraine on February 24th. Vladimir Putin expected the invasion to take 100 hours. We are already well past 100 days with many people feeling it could last into next year.<\/p>\n
A simple question stems from that: how much damage will the war do to the global economy?<\/p>\n
Last month, the National Institute for Economic and Social Research (NIESR) estimated that the war will \u2018wipe $1.5tn (\u00a31.2tn) off the global economy\u2019 as energy costs soar and there are worries about food supplies. To put that in some sort of perspective, the International Monetary Fund currently puts the cost of the pandemic at $12.5tn (\u00a310tn) \u2013 so on those figures, the war has to date cost the global economy roughly 12% of what the pandemic cost.<\/p>\n
The problem is, of course, that the longer the war goes the more the direct cost will be. The GDP of Ukraine was put at $66bn (\u00a352bn) before the war and Russia\u2019s was estimated at $1.78tn (\u00a31.43tn). In addition, there will be an increasing indirect cost as nations run short of food and businesses fail to cope with rising energy prices. One report suggested that as many as 40,000 businesses were in danger of collapse in Karachi, Pakistan\u2019s commercial capital, as energy prices continued to climb.<\/p>\n
Unsurprisingly, given all the above, the World Bank has warned of the very real possibility of a global recession. World Bank head David Malpass told an audience in the US that it was \u2018difficult to see how we can avoid a recession\u2019. Even without the war, he said, \u2018the idea of energy prices doubling is enough to trigger a recession by itself\u2019.<\/p>\n
And that is the problem with Russia\u2019s invasion of Ukraine. As the pandemic came to an end \u2013 and as the world started to recover \u2013 the Russian tanks rolled across the border. The world lurched from one crisis to another.<\/p>\n
The real answer to the question in the title is, of course, we don\u2019t know. While there will undoubtedly be plenty more twists and turns ahead, so far world stock markets have proved relatively resilient to the war \u2013 with the obvious exception of the Russian market. If, however, you have any questions at all on how the war might impact your savings and investments then, as all our clients know, we are never more than a phone call or an email away.<\/p>\n","protected":false},"excerpt":{"rendered":"
As this article is being written, Vladimir Putin is threatening \u2018more invasions.\u2019 Two British fighters captured in Ukraine have been sentenced to death: the BBC is warning of a possible cholera outbreak in Mariupol and the fighting continues in the Donbas. No doubt by the time you read the article the headlines will be different \u2013 but no less depressing. What now seems to be undeniably true \u2013 and…<\/p>\n