A German study has found that the ongoing Russia-Ukraine war cost the world economy a whopping $1.3 trillion in 2022.
According to the study published by the German Economic Institute (IW) on Tuesday, Western economies were particularly affected as they lost two-thirds of their global production, reports Xinhua news agency.
The war has a “high global economic significance”, IW expert Michael Groemling said in a statement.
Above all, energy and raw material supply problems were putting pressure on companies worldwide, he added.
In Germany, Europe’s largest economy, soaring energy prices pushed inflation temporarily above the 10 per cent mark in 2022 before relief measures brought prices down again.
In January, inflation stabilised at 8.7 per cent, according to provisional data published by the Federal Statistical Office.
“High energy prices caused cost shocks at the production level, which became a burden difficult to calculate for many companies,” the IW said.
The resulting rise in consumer prices “eroded the purchasing power of households, which cut back their consumption”, the institute noted.
Finally, companies were reluctant to invest due to the global uncertainty and higher prices.
For 2023, the IW projects an additional global value-added loss of $1 trillion.
“Unfortunately, the all-clear is not yet in sight this year,” Groemling said, warning that raw material shortages and uncertainty would “continue to occupy us beyond 2023 and cost prosperity”.
The International Monetary Fund (IMF) last month raised its forecast for the global economy in 2023 slightly, expecting growth of 2.9 per cent instead of 2.7 per cent.
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