Business and economic impact of the war in Ukraine

In only a few weeks, thousands of lives have been lost. More than 4.9 million refugees have fled Ukraine to date and at least 7.1 million people have been displaced within the country.¹ The growing humanitarian crisis has led to an influx of public and private aid. On March 10, the US Congress, for example, approved US$13.6 billion in emergency spending for Ukraine.² The E.U. has announced €10 billion (US$11 billion) in aid for Ukrainian refugees.³

¹“Ukraine Refugee Situation,” UNHCR (2022) as of April 18th 2022.

²“Ukraine Supplemental Appropriations Act, 2022,” US government website (2022.); “Visualizing the $13.6 billion in US Spending on Ukraine,” The New York Times (2022).

³“War in Ukraine: MEPs Unlock Emergency Funds for Refugees,” European Parliament (2022).

Not every company may be affected in the same way. Organizations that operate in Ukraine and Russia have been most immediately affected and are focused on the welfare of their people. For organizations outside the conflict zone, the focus has been on complying with sanctions, responding to supply chain disruptions and assessing the impact on customers. Different industries could also feel the war’s impact to different extents. High oil and gas prices, for example, mean energy-intensive manufacturing sectors may be most affected. In parallel, inflationary pressure may accelerate the rise of wage inflation in some countries and industries. The industries that could be most impacted by wage inflation are those in which labor represents a large part of their overall cost structure.

The current view among leading forecasters is that the war will lead to a material deceleration in growth. But the economic impact will vary widely by country and region. Compared to the US, Europe’s stronger trade linkages to Russia and heavier reliance on Russian energy imports make it more vulnerable to a growth slowdown. European countries with higher dependency on Russian oil and gas would be more significantly impacted. The US, meanwhile, would primarily be affected by higher oil prices and their knock-on effect on household wealth and consumer spending. Beyond Europe and the US, net oil and commodity importers like Japan and India would be affected by a sustained period of high oil and commodity prices. Emerging-market commodity importers in Asia and Africa would be particularly exposed to higher prices. These nations also would be affected more by the strain on food supply chains.