Economic Impacts of

Russo-Ukranian War
Introduction
On 24 February 2022, Russia invaded Ukraine, in a steep escalation of the
Russo-Ukrainian War that began in 2014. The invasion caused Europe's fastest-growing
refugee crisis since World War II,[16][17] with more than 6.9 million Ukrainians fleeing the
country[18] and a third of the population displaced.[19][20]
Background
With the collapse of the Soviet Union in 1991, Ukraine became an independent
state, formalised with a referendum in December 1991. On 21 January 1990, over
300,000 Ukrainians[46] organized a human chain for Ukrainian independence
between Kyiv and Lviv. Ukraine officially declared itself an independent country on
24 August 1991, when the communist Supreme Soviet (parliament) of Ukraine
proclaimed that Ukraine would no longer follow the laws of USSR and only the laws
of the Ukrainian SSR.This was start of a long rivalry that still persists.
Key Personalities
Vladimir Vladimirovich Putin is a Russian statesman and political figure. Acting
President of the Russian Federation, Chairman of the State Council of the Russian
Federation and Commander-in-Chief of the Armed Forces of the Russian Federation. He
was the prime minister of Russia from 1999 to 2000 and again from 2008 to 2012,[c] thus
having served continuously as either president or prime minister from 1999 onwards.[7]
The level of support for Putin in Russia is over 69 percent.[8]
Volodymyr Oleksandrovych Zelenskyy also transliterated as Zelensky or
Zelenskiy,[b] is a Ukrainian politician and former comedian and actor[4] who has served
as the sixth and current president of Ukraine since 2019.
An inside of the Russian Economy [Before War]

● It is a large-scale economy due to its territory (6,6 million square miles or the largest country in the
world), population (about 143 million people on the 1st October 2013 — the ninth largest in the
world), as well as its mighty labour, natural, sci-tech, sociocultural and industrial resources
● The wealth and variety of natural resources including lands, minerals, forests, and water. Russia
takes one of the leading positions if not to say is ranked #1 internationally concerning its area size
of agricultural lands (540 million acres), forests (1,912 million acres), water resources (4310 cubic
kilometers of river runoff per year), assured resources of oil and gas, coal, ferrous and some
non-ferrous metal ores, mining and chemical materials. Russian climate and weather conditions
regretfully disturb the efficient use of natural wealth
● The modification of the economic advancement model, change-over to open economy have
led to Russia’s integration into the international economy.During the period of the
centralized planned economy, the monopoly of the external trade protected Russian
enterprises and internal market against the competition of foreign dominant companies and
transnational corporations.
How the invasion started

At the start of the invasion, Russian attacks were launched on a northern front from Belarus towards Kyiv, a
northeastern front towards Kharkiv, a southern front from Crimea, and a southeastern front from the cities
of Luhansk and Donetsk.[43][44] During March, the Russian advance towards Kyiv stalled. Amidst heavy
losses and strong Ukrainian resistance, Russian troops retreated from Kyiv Oblast by 3 April. On 8 April,
Russia announced that its forces in southern and eastern Ukraine would be placed under the command of
General Aleksandr Dvornikov, and some units withdrawn from northern Ukraine were subsequently
redeployed to the Donbas.[45] On 19 April, Russia launched a renewed attack across a 500 kilometres (300
mi) long front extending from Kharkiv to Donetsk and Luhansk, with simultaneous missile attacks directed
at Kyiv in the north and Lviv in western Ukraine.[46] By 13 May, Russian forces near Kharkiv had withdrawn
following a Ukrainian counter-offensive. By 20 May, Mariupol fell to Russian troops following a prolonged
siege of the Azovstal steel works.[47][48]
History of Economic Impacts of The War

Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), warned that
the conflict posed a substantial economic risk for the region and internationally. She added that the
IMF could help other countries impacted by the conflict, complementary to a $2.2 billion loan
package being prepared to assist Ukraine.

David Malpass, the president of the World Bank Group, said that the conflict would have far-reaching
economic and social effects, and reported that the bank was preparing options for significant economic and
fiscal support to Ukrainians and the region.[21]
Economic Impacts on Russia
Economic sanctions affected Russia from the first day of the invasion, with the stock market falling
by up to 39% (RTS Index). The Russian ruble fell to record lows, as Russians rushed to exchange
currency.[32][33][34] Stock exchanges in Moscow and St. Petersburg were suspended until at least 18
March,[35] making it the longest closure in Russia's history.

On 26 February, S&P Global Ratings downgraded the Russian government credit rating to "junk",
causing funds that require investment-grade bonds to dump Russian debt, making further borrowing
very difficult for Russia.[37]

On 27 February, BP, one of the world's seven largest oil and gas companies and the single largest foreign
investor in Russia, announced it was divesting from Rosneft
Russia is reportedly experiencing brain drain due to mass emigration of more than 300,000 mainly younger
Russians,[52] many of whom are tech industry professionals, to countries like Armenia, Georgia, and
Turkey.[53][54] More than 50,000 Russian information technology specialists have left Russia.[55] In response
to sanctions in the entertainment industry, Russia is considering the legalisation of software piracy.

Despite International sanctions during the Russo-Ukrainian War, Russian energy sales have increased in
value, and its exports have expanded with new financing options and payment methods for international
buyers.

At the same time, Russian budget accumulated record deficit of 1.450 trillion rubles by August, mostly due
to collapse of tax income from fossil fuel exports from 70 billion down to 33.7 billion rubles per month, with
total reduction of monthly budget incomes by 10%.[63][64] In September, Russian Ministry of Finance notified
all public sectors of reduction in spending by 10%

According to various estimates, every day of the war in Ukraine costs Russia $500 million to $20 billion.
Economic Impacts On Ukraine

Ukraine’s economy is expected to shrink by an estimated 45.1 percent this year,

The latest figure for direct losses of the Ukrainian economy from Russian aggression
is about $113.5 billion

As the war continues, the tens of millions of people still living in Ukraine are fighting to
find jobs in some of the worst economic conditions the country has ever seen.
A report published by the National Bank of Ukraine revealed how the unemployment
rate in the country has tripled to an “unprecedented” 35%, meaning 5.2 million
working-age people are searching for jobs as businesses continue to close as a result
of the war.

The war in Ukraine has wreaked havoc on economies outside of Ukraine, too.
Global Impact of The War
The economic impact of the 2022 Russian invasion of Ukraine began in late February 2022, in
the days after Russia recognized two breakaway Ukrainian republics and launched an invasion
of Ukraine. The subsequent economic sanctions have targeted large parts of the Russian
economy, Russian oligarchs, and members of the Russian government.

Russia has responded with sanctions of its own. Both the conflict and the sanctions have had
a strongly negative impact on the world economic recovery during the COVID-19 recession. As
a result of its war, estimates of a 30-year economic setback are projected for Russia.
One of the most alarming supply chain issues resulting from the Russia-Ukraine war is food
shortages, particularly acute in low-income countries in Africa. Ukraine and Russia account
for about a third of the world’s wheat and a quarter of barley production, not to mention
some 75% of the sunflower oil supply — all critical commodities for keeping humans fed.

The state of transportation routes connecting China with Europe is another casualty of the
Russian invasion. Surging gas prices are increasing freight costs for all modes of transportation.
The train route connecting the regions, which became highly competitive during the height of
COVID-19, especially for industries valuing shorter lead times such as automotive and electronics,
is now stalled. This is especially true for the primary corridor that traverses Russia, Belarus, and
Poland before continuing on to Germany, France, and other European countries.
Indian-Russian relations after war
In March 2022, when Western nations imposed economic sanctions on Russia in the aftermath of its
invasion of Ukraine, India and Russia explored alternative payment systems due to exclusion of most
Russian banks from SWIFT and Visa/Mastercard.

Officials from both countries were discussing accepting RuPay and MIR cards. The Reserve Bank of
India and the Bank of Russia seek to facilitate financial transactions through an independent
rupee-ruble exchange system, particularly for the purchase of sunflower oil by India, and the export of
petroleum products and fertilizers by the Russian Federation.

India also depends crucially on Russia for its defence equipment and parts. Additionally, Indian Oil
Corp. had reportedly reached a deal to buy 3 million barrels of oil from Russia's Rosneft at a 20%
discount to global prices
 What is SWIFT?
Swift is the global financial artery that allows the smooth and rapid transfer of money
across borders. It stands for Society for Worldwide Interbank Financial
Telecommunication.

Created in 1973 and based in Belgium, Swift links 11,000 banks and institutions in more than 200
countries.

But Swift is not your traditional High Street bank. It is a sort of instant messaging system that
informs users when payments have been sent and arrived.
How Banning Russia From SWIFT Affect it?
In March, seven Russian banks were removed from Swift including Bank Otkritie,
Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, Vnesheconombank (VEB) and
VTB Bank.

The European Commission now wants to exclude a further three including the country's biggest
lender, Sberbank, which accounts for more than a third of Russia's banking sector.

The aim is for Russian companies to lose access to the normal smooth and instant transactions
provided by Swift, disrupting payments for its valuable energy and agricultural exports.Banks now
have to deal directly with one another, adding delays and extra costs, and ultimately cutting off
revenues for the Russian government.
Russia was threatened with a Swift expulsion before - in 2014 when it annexed
Crimea. Russia said the move would be tantamount to a declaration of war.Western
allies did not go ahead, but the threat did prompt Russia to develop its own, very
fledgling, cross-border transfer system called the System for Transfer of Financial
Messages (SPFS) as an alternative to Swift.

Few foreign countries currently use SPFS, but India is reportedly considering a
Russian proposal to use it for payments in roubles.
Bibliography
https://en.wikipedia.org//wiki/History_of_Ukraine

https://en.wikipedia.org/wiki/Vladimir_Putin

https://en.wikipedia.org/wiki/Volodymyr_Zelenskyy

https://rusoutsourcing.com/blog/articles-group/the-essential-features-of-russian-economy

https://rusoutsourcing.com/blog/articles-group/the-essential-features-of-russian-economy

https://en.wikipedia.org/wiki/Economic_impact_of_the_2022_Russian_invasion_of_Ukraine

www.worldbank.org/en/news/press-release/2022/04/10/russian-invasion-to-shrink-ukraine-
economy-by-45-percent-this-year
https://www.19fortyfive.com/2022/08/expert-ukraines-economy-has-been-destro
yed-by-russias-invasion/

https://en.wikipedia.org/wiki/India%E2%80%93Russia_relations

https://www.bbc.com/news/business-60521822