Russia-Ukraine war to wipe $1.5 trillion off global economy

Russia’s invasion of Ukraine will wipe $1.5 trillion off the global economy this year, reveals new analysis released today.

Soaring energy and food prices triggered by concerns about supply security as Moscow continues its assault on Ukraine will deliver a heavy blow to global economic activity, according to the National Institute of Economic and Social Research (NIESR).

Central banks will have to respond to what is forecast to be an annual inflation rate of 8.2 per cent in the group of countries in the Organisation of Economic Cooperation and Development by hiking interest rates.

Tighter monetary policy will weigh on the global economy, the NIESR said.

Governments will need to step up support for households and businesses to offset a marked slowdown in growth.

“Countries who have the fiscal policy space to cushion the impact of the war on their economies should use it to ease the real income squeeze,” the NIESR added.

Recessions in Ukraine and Russia account for around half of the global growth slowdown.