The document discusses the economic impacts of the war in Ukraine. It notes that while global activity was picking up, confidence has declined due to the war. Russia is facing high inflation and a sharp drop in commercial links. Commodity prices have surged since the war began. Inflationary pressures are broadening in many countries. The war is weakening global growth and increasing inflation. A large refugee crisis is also underway in Eastern Europe as many Ukrainians flee the war.

1. 30 May 2022
Tomasz Kozluk
OECD Department of Economics
Global developments and
Impacts of the War in Ukraine

2. 2
Global activity indicators continue to pick up but confidence has declined

3. 3
Russia faces a price shock and a sharp decline in commercial links
Note: The price level series shows the cumulative impact of weekly consumer
price inflation..
Source: Rosstat; and OECD calculations.
Note: Flights refer to actual domestic and international commercial flights (as opposed to scheduled flights).
Source: flightradar24.com; and OECD calculations.

4. 4
The zero-Covid policy has also resulted in a sharp slowdown in China
Note: Figure shows actual domestic and international flights.
Source: Radarbox

5. 5
Commodity prices have surged since the onset of the war in Ukraine
Note: Based on average of daily prices between February 24-April 28 2022 for
all commodities apart from wheat and corn (average prices in March).

6. 6
Fossil fuel prices have increased and become more volatile
Oil
Brent, USD/barrel
Note: Latest data 3 May 2022.
Source: Refinitiv.
Gas
EUR/MWh
Note: Shows the evolution of TTF Neutral Gas Price for Europe and
Henry Hub for the United States. Latest data 3 May 2022.
Source: Refinitiv; and OECD calculations.
Coal
Newcastle (fob), USD/Mt
Note: Figure shows weekly prices for Newcastle FOB
6000kcal/kg NAR. Newcastle refers to Newcastle, Australia.
Latest data 29 April 2022.
Source: IHS Markit; Argus.

7. 7
There are renewed signs of supply-chain disruptions
Note: Defined as 100 minus the proportion of PMI survey respondents reporting
that delivery times have stayed the same or become faster.
Source: Markit; and OECD calculations.
Note: Estimated proportion of goods waiting on container ships.
Source: Kiel Trade Monitor.

8. 8
Inflationary pressures continue to broaden
Note: Based on quarterly data for headline and core consumer price inflation. Personal consumption deflator in the United States, harmonized consumer prices in the EU
economies and national consumer prices in other economies. Figures for 2022Q1 are OECD estimates for some countries. In right-hand panel, quarterly numbers are
quarter-on-quarter changes at an annualised rate.

9. 9
Inflationary pressures could be stronger and longer lasting

10. 10
Financial market risks amidst widespread repricing: from high debt, elevated
asset prices (especially housing) and potential capital flow movements
Note: Fiscal year projections for India.

11. 11
The currencies of many commodity exporters have recently
appreciated against the US dollar.
Note: Changes between average bilateral USD exchange rate in January 2022
and average over April 1-14 2022. A positive number indicates a currency
appreciation against the US dollar.
Source: Refinitiv; and OECD calculations.

12. 12
Policy interest rates are now rising in many economies and market
expectations of future policy rates have increased
Note: Decomposition refers to changes between end-March and end-December
2021, and changes between end-December 2021 to April 14 2022.
Source: Refinitiv; and OECD calculations.
Source: Refinitiv; and OECD calculations.

13. 13
The consequences of the war are already weakening
global growth and adding to inflation
Note: Based on simulations with the NiGEM macroeconomic model of the combined effect of differences between commodity prices in the period from 24 February to 9 March and
the January average, a 50% rouble depreciation against the US dollar, bilateral currency depreciations of 5% against the US dollar in Bulgaria, the Czech Republic, Hungary, Poland,
Romania and Turkey, increases of 10 percentage points in policy interest rates and risk premia in Russia, higher risk premia in emerging-market economies, ex-ante declines of 15%
and 40% respectively in domestic demand in Russia and Ukraine in 2022H1.
Source: OECD calculations using the NiGEM global macroeconomic model.
Simulated impact on GDP, first full year
%
Simulated impact on annual inflation
% points

14. 14
A refugee crisis is underway
Note: Asylum applicants are considered those who have submitted an
application for international protection. The solid red bar is the estimated number
of Ukrainian refugees between 24 February and 3 May 2022.
Source: Eurostat; UNHCR; and OECD calculations.
Refugee arrivals are surging
Note: Figures as of 3 May 2022.
Source: UNHCR; and OECD calculations.
Eastern European countries have already
received a large number of refugees
Receiving countries of refugees fleeing Ukraine, ‘000s

15. 15
Summary of the outlook
• The war in Ukraine has generated a major humanitarian crisis and
changed economic prospects considerably.
• A weaker recovery is now expected, and inflation pressures are
higher and expected to last longer.
• The prospects of a full recovery from the pandemic in many EMEs
have receded further.
• The war in Ukraine has pushed up commodity prices substantially
and, together with disruptions in China, is adding to supply-chain
pressures.
• Uncertainty is high and there are substantial downside risks.

16. Thank you
16
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