By how much will the war in Ukraine reduce global growth?

For a look behind the scenes of our data journalism, sign up to Off the Charts, our weekly newsletter

When the EIU, our sister company, published its global economic forecast on February 15th, war in Europe still seemed improbable. The world’s GDP was expected to increase by 3.9% in 2022, after a stellar 2021. Just nine days after publication, however, Russian tanks rolled into Ukraine. The economic reverberations from the war have since been felt across the world. It has put pressure on global commodity prices, aggravated supply-chain disruptions and contributed to soaring inflation in much of the world (see chart). Other factors, such as China’s zero-covid policy, are also weighing on growth.

A new forecast by the EIU—which expects the fighting to continue until at least the end of the year—has revised its global growth estimates down by 1.1 percentage points, to 2.8% year-on-year. In other words, the war has taken $1trn off this year’s forecast for global GDP. Other organisations predict a similar shock. The IMF cut its global growth forecast for the year by 1.2 percentage points from its original estimate in January, to 3.2%.

The EIU data show that Russia will be the hardest hit among the G20, a club of mostly rich countries. Its economy held up surprisingly well at first against Western sanctions. But by the end of 2022 the EIU reckons its pariah status will cause its economy to contract by 10%, compared with their initial assessment of 2.6% growth. Ukraine’s economy is expected to suffer an even more severe blow. The World Bank estimated in April that it will contract by 45% this year (the EIU has not published individual forecasts for countries outside the G20).

Other countries are also feeling the squeeze. The EIU has cut its forecasts for 15 of the G20 countries. Germany’s is down by two percentage points from the initial estimate, to 1.3% this year—mostly because of disrupted supply chains and the country’s heavy reliance on Russian energy. Germany’s forecast growth rate is the second-lowest in the G20, ahead of only Russia.

Some countries will manage to buck the trend. Saudi Arabia’s revised forecast rose by three percentage points to 7.5%—the highest in the G20. Its oil revenues have soared, thanks to rising commodity prices. Meanwhile, the annual growth forecasts for Argentina and Brazil—two of Latin America’s largest grain producers—have increased by 1.3 and 1.2 percentage points respectively. Still, global growth is expected to slow even further in 2023. Few countries will manage to escape the economic fallout of Russia’s war. ■