Thus far, our discussion has focused on the impact of the war on the belligerents—Russia, Ukraine—and their immediate neighbors. It has looked at the specific military consequences, potential escalation scenarios, and consequences for Russia, NATO, Turkey, and the Balkans. But the war will inevitably have broader consequences for the global economy, too.

Slower Economic Recovery from the Pandemic
Before Russia invaded Ukraine, projections estimated global economic growth in 2022 would be around 5 percent. The war in Ukraine was a “massive and historic energy shock” to the markets, according to a November 2022 report by the OECD. The “shock” of the war was one of the main factors that had slowed economic growth in 2022 to just 3.1 percent, and why the OECD projected it to slow to 2.2 percent in 2023. The war, the report found, has had the greatest impact on Europe's economy, where growth in 2023 is projected to be just 0.3 percent.

A Massive Investment in Ukraine
In September 2022, the World Bank estimated that the cost of rebuilding Ukraine would be about $349 billion, a number that is larger than Ukraine's pre-invasion GDP and three-times greater than all the military, humanitarian, and financial assistance commitments to Ukraine since the start of the war, and is certainly much higher now.

Ukraine demands reparations, which seem unlikely to occur; instead, Russia appears to be preparing for a longer and larger-scale conflict. As of June 2022, the allies had seized $30 billion in assets owned by the Russian elite and frozen $300 billion owned by the Russian central bank. (More recent reports put the amount in the tens of billions.) It may be possible to transfer some of this to Ukraine, but the law on doing so needs to be explored, and the amounts involved would remain short of what is or will be necessary. Whether Ukraine and its Western allies will ever be able to compel Russia to pay reparations will depend on the outcome of the war.

How postwar reconstruction proceeds will depend on the war as well. Specifically, how it ends. Until the fighting ceases, any measures will simply be stopgaps—repairs to restore power supplies or guarantee water, humanitarian aid to provide temporary housing or continue medical care. If the fighting stops, but a still-dangerous frozen war is the result, private investors will remain reluctant, unless provided guarantees of security, or compensation against losses.

The United States has so far given the most—$47.9 billion—to Ukraine, but nearly all of it has been given in military and humanitarian aid, while EU countries have provided the largest amount of financial assistance. As a percentage of a giving nation's GDP, between January and November 2022, the United States devoted 0.23 percent; Estonia and Latvia each devoted roughly one percent; Poland provided 0.5 percent.

Read the full article about war in Ukraine by Brian Michael Jenkins at RAND Corporation.