Geopolitical divisions will lower potential GDP growth
Thursday, April 21, 2022
Significance
The war in Ukraine will have widespread and lasting impacts on three fronts: supply and price shocks in strategic commodities; the fallout from Western sanctions on Russia; and heightened geopolitical division fragmenting the global economy.
Impacts
- GDP in many states will be lower in 2023 and thereafter than was forecast before the pandemic; Europe and fragile EMs will be hardest hit.
- Commodities output, consumption and trade patterns will change as countries seek more self-sufficiency, creating chances for new suppliers.
- Most EM economies took longer than developed states to recover from the COVID-19 crisis; Ukraine war impacts will intensify this unevenness.