February 24 marks one year since Russia invaded Ukraine. As the fighting continues and a diplomatic solution does not seem to be on the cards, what impact has the war had on the world? Here are five charts that answer this question.
The war’s impact on economic growth
The January 2022 edition of the International Monetary Fund’s (IMF) World Economic Outlook (WEO) expected global GDP to grow at 4.4% and 3.8% in 2022 and 2023. These numbers were brought down to 3.4% and 2.9% in the January 2023 edition of WEO. While GDP growth is driven by a multitude of factors, the war in Europe has caused the strongest headwinds to the global economy in the last year. To be sure, the war’s economic impact is not the same across regions. Advanced economies faced the sharpest growth revisions in both 2022 and 2023 (down by 1.2 and 1.4 percentage points in 2022 and 2023, respectively), while the impact on the emerging market and developing economies was relatively milder (down by 0.9 and 0.7 percentage points in 2022 and 2023, respectively).
See Chart 1: Percentage change in IMF’s growth numbers between January 2022 and January 2023
Inflation has emerged as a much bigger problem than low growth
Thanks to the economic sanctions imposed on Russia and the disruption to supply chains due to the war, there has been a massive inflationary spike in the past year. Even though inflation levels have fallen in the recent period, they are still excessively high by historical standards. Data from the Organisation for Economic Co-operation and Development (OECD) shows that retail inflation, as measured by the Harmonised Index of Consumer Prices (HICP), started increasing sharply since February 2022; HICP includes both food and energy prices. Annual growth in inflation more than doubled to 10.6% in October 2022, from 5.1% in January 2022.
See Chart 2: Monthly HICP inflation and HICP-Energy inflation in Euro Area
The Russian economy has proved to be more resilient than expected
In the aftermath of the imposition of economic sanctions on Russia, the White House in April 2022 said that Russia’s GDP would contract up to 15% in 2022, effectively “wiping out the economic gains made by the country in the last 15 years” (https://bit.ly/3IjnWK1). A December 2022 Financial Times article reported that Russia’s own technocrats had privately warned Putin of a possible 30% GDP fall (in dollar terms) over two years (https://on.ft.com/3YToJrU). Defying expectations, the Russian economy shrank by only 2.5% in 2022, as per the official estimates from the Russian central bank. The January 2023 edition of IMF’s WEO puts the 2022 contraction at 2.2% and it expects the Russian economy to grow by 0.3% in 2023. However, it is not possible to estimate the economic impact of the sanctions on Russia unless Rosstat publishes its trade figures.
See Chart 3: Growth rate of Russia’s GDP
The surge in military expenditure is lower than in the Gulf war
Has the west really stepped up to support Ukraine against Russia? Data from the North Atlantic Treaty Organization (Nato) shows an absolute rise in the military expenditure of all G7 nations (except France) in 2022 from 2021. Based on the historical data from the World Bank, it is possible to make a long-term comparison of military spending as share of GDP. The current military spending of most G7 nations remains lower than what it was during the Gulf war (1991-92), but marginally higher than the two wars fought in Afghanistan (2002-08 and 2008-14). Russia’s military expenditure, meanwhile, shows the same trend. To be sure, the United States and the United Kingdom spent 3.3% and 2.3% of GDP on their military in 2022, lower than both Gulf war and the two wars in Afghanistan.
See Chart 4: Military expenditure as share of GDP for G7 and Russia
Diverging public opinions of the war in the west and non-west
The anniversary of the war has seen the US President making an unscheduled trip to Ukraine and the Russian President castigating the West in an address and threatening to exit a key arms control treaty. A recent poll conducted by the European Council on Foreign Relations (ECFR) shows that popular opinion around the war is very different across countries. While a large majority in non-Western countries is tilted in favour of Russia, 77% of British, 71% of Americans and 65% of Europeans are united in believing that Russia is an “adversary” or a “rival”. India, the poll shows, is among the countries with the most favourable disposition for Russia.
See Chart 5: Country-wise responses on their perception of the war