One year of the war in Ukraine leaves lasting scars on the global economy | United Nations (2024)

FAQs

How has the war in Ukraine affected the global economy? ›

As Ukraine is a major producer and exporter of many key food supplies, notably wheat, maize and oilseeds, global food supply chains faced major disruption as a result of Russia's war on Ukraine. Before the war, the EU also imported a great deal of food and fertilizers from Ukraine.

Russia's invasion of Ukraine has economic consequences in the US and around the world, exacerbates uncertainty, destabilize commodity markets, and inflation is potentially being increased as we encounter gas and food prices rise around the world.

Ukraine's commerce and industry sectors were estimated to suffer the highest losses from the Russian invasion that started on February 24, 2022, at 173 billion U.S. dollars. The estimate includes the period from February 24, 2022, to June 30, 2025.

Russia's attack on Ukraine placed a further squeeze on critical commodities – food and energy. This was the result of reduced output from both countries and sanctions on Russia. Costs climbed even further, triggering inflation rates that far outpace wage growth.

The Russia–Ukraine war reduced imports from Ukraine by 47.3% until August 2022. Ukraine lost $19.4 billion in exports, while Russia gained $68.3 billion. Russia realized trade gains of $41.1 billion in Asia. The war had limited trade implications for not directly involved countries.

The bank added that from the beginning of the war to the end of last year "direct damage in Ukraine has now reached almost $152 billion, with housing, transport, commerce and industry, energy, and agriculture as the most affected sectors."

Russia's decision to invade Ukraine further complicates global supply chain challenges and will increase inflationary pressures. In our most recent chartbook, we note that persistent pandemic-related disruptions to the supply chain will mean continued shortages of goods at least through 2022 and likely beyond.

U.S.-Ukraine Relations

The United States established diplomatic relations with Ukraine in 1991, following its independence from the Soviet Union. The United States attaches great importance to the success of Ukraine's transition to a modern democratic state with a flourishing market economy.

Wars often cause immense economic damage. In war sites, the capital stock, which comprises economic assets such as machinery and buildings, is destroyed. At the same time, economic output, on average, falls by 30 percent and inflation rises by about 15 percentage points over five years.

$155 billion — the total amount of damages caused to Ukraine's infrastructure due to the war, as of January 2024. The total amount of direct documented damages inflicted upon Ukraine's infrastructure due to the full-scale invasion by Russia as of January 2024 stands at $155 billion (at replacement cost).

What are the effects of the war in Ukraine? ›

It caused the one of the fastest population movements since World War II as people were forced to flee from their homes. 6 million people displaced were within Ukraine and another 8 million fled the country as refugees. By March 2023, 11 million Ukrainians faced hunger – almost a third of the population.

Ukraine Remains Resilient

The pace of recovery in Ukraine is projected to slow to 3.2% this year from 4.8% in 2023, reflecting a smaller harvest and a persistent labor shortage. The country's economic outlook remains conditional on donor support.

World Bank data shows that businesses in eastern Ukraine experienced a 70% slump in sales between the invasion and the end of 2023, and those in the south a drop of 63%. In comparison, companies' sales in the west decreased 39%.

The disruption of supply chains originating from these countries has resulted in shortages and price spikes in global markets. Industries dependent on these essential commodities, such as food production and manufacturing, are grappling with supply chain disruptions, hampering their operations and increasing costs.

The Russian invasion of Ukraine and the COVID-19 pandemic jointly led to a significant increase in the world price of food and crude oil. The rise in the world food price index after the invasion was driven by a significant increase in the price of dairy and oils.

Wars often cause immense economic damage. In war sites, the capital stock, which comprises economic assets such as machinery and buildings, is destroyed. At the same time, economic output, on average, falls by 30 percent and inflation rises by about 15 percentage points over five years.

U.S.-Ukraine Relations

The United States established diplomatic relations with Ukraine in 1991, following its independence from the Soviet Union. The United States attaches great importance to the success of Ukraine's transition to a modern democratic state with a flourishing market economy.

Global economic challenges refer to diverse and complex issues such as economic downturns, climate change, political instability, and increased global competition that pose immediate threats to economic systems.

In February 2022, Russia launched a full-scale invasion of Ukraine and began occupying more of the country, starting the biggest conflict in Europe since World War II. The war has resulted in a refugee crisis and tens of thousands of deaths.