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  • How full-scale Russian aggression in Ukraine affected the world economy - Veronika Movchan

    21.10.2022

    Veronica Movchan, scientific director of the IER, took part in the “Krynica Forum ’22 – Growth and Reconstruction” that is an international event bringing together business, politics and the world of science. Its goal is to strengthen the security, prosperity, social cohesion and economic position of Poland and the countries of Central and Eastern Europe.

    Key messages of Veronica regarding the war in Ukraine and its impact on the global economy you can find below.

    • The global economy faced many challenges well before the full-scale war in Ukraine. That included growing food and energy prices, pandemic-induced logistic disruptions, climate change and thus, the need for the green transition, to name a few. 
    • The Russian aggression against Ukraine made these challenges much more pressing and added new shocks
    • The full-scale war contributed to the following:
    • Decreased supply and growing food prices affecting the poorest and import-dependent    countries primarily 
    • Rising energy prices and global rethinking of energy supply networks  
    • Migration shock impacting the labour market both in Ukraine and Europe and resulting in a major brain drain from Ukraine 
    • New pressures on transport networks in Europe 
    • The increased demand for international aid in the situation when the developed countries themselves are coping with economic shocks 
    • Although the use of economic interlinkages as a tool for blackmailing is not new (for instance, Russia did that in 2009 when the new gas contract with Ukraine was signed under the tremendous pressure of stopped gas transit to Europe), this fragility became very visible after the amplification of aggression 
    • There are many economic policy responses to the shock. However, only Ukraine’s victory would signify the return to the rule-based international order that can ensure the efficiency of policy measures. 
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