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The war in Ukraine continues to impact the global economy.

A post-pandemic spending frenzy was expected to help exhausted people rediscover a feeling of normalcy after two calamitous years. All of that changed when Russia invaded Ukraine. A unified West retaliated against Russia with crippling economic sanctions.

Now, after more than a year, the world is experiencing significant economic disruptions. Increased government spending has led to higher debt and strained public finances, while disruptions to trade has caused economic activity to decline, leading to business closures and shortages.

As a result, citizens throughout the world have experienced economic hardships. The global economic disaster that followed the start of the war was unavoidable, but owing to globalization, the economic crisis did not end in a single area or country. Following a year of conflict, the phrase “economic crisis” is now being used by practically every country on the planet.

Global growth is expected to decrease from an anticipated 3.4% in 2022 to 2.9% in 2023, before rebounding to 3.1% in 2024. The prediction for 2023 is 0.2% points higher than the October 2022 forecast, although it is still below the historic (2000-19) average of 3.8%. The hike in central bank rates to combat inflation continue to impact economic activity. COVID-19’s quick expansion in China slowed growth in 2022, but its recent reopening has prepared the path for a faster-than-expected rebound.

Worldwide inflation is predicted to decline from 8.8% in 2022 to 6.6% in 2023 and 4.3% in 2024, remaining above pre-pandemic levels of about 3.5% (2017-19). Moreover, the continued economic sanctions targeting Russia will raise the prices of goods. As a consequence, both the developed and developing world will continue to face high inflation.

The war in Ukraine has squeezed global food supplies, with 345 million people facing food insecurity in 2023. In addition, food costs jumped 14.1% in January 2023.

World food prices, on the other hand, declined marginally, with the UN Food and Agriculture Organization Food Price Index falling to 135.7 in November from 135.9 in October, considerably below the peak of 159.7 in March but still above pre-war levels.

As a consequence, 222 million people endured extreme food insecurity globally last year. However, throughout the conflict, consumer prices in the richest nations rose 7.3% last year, above its January 2022 projection of 3.9%, and 9.9% in the poorest countries, exceeding the 5.9% projected before the war.

With the outbreak of the war, the increase in energy prices had a direct impact on consumers and companies with energy-intensive expenditures, especially those in nations with substantial energy imports from Russia. The increase also exacerbated a preexisting inflation issue that was exacerbated in part by extremely stimulative fiscal and monetary measures undertaken during the pandemic.

On the monetary side, central banks have reacted to growing inflation by further tightening, with interest rates hitting 4.5% in the United States, 2.5% in the eurozone, and 3.5% in the United Kingdom, intensifying recession fears.

Throughout the Ukrainian conflict, the global economy has seen major currency devaluation, a decline in reserves, and a decline in investments. Thus, worldwide venture capital financing in 2022 totaled $445 billion, a 35% decrease from the $681 billion spent in 2021.

In contrast, the decline in the worldwide currency reserves during the second quarter of 2022 was the greatest compared to the same period the year before. In 2022, when it reached $12 trillion, the decline was the worst in the last two decades, exceeding 6% (quarter-over-quarter). The foreign exchange reserve decreased by $4.85 billion to $532.66 billion in the fourth quarter of 2022.

Throughout the last year, the value of the U.S. dollar compared to a basket of international currencies has seen a significant adjustment. At the commencement of the conflict, the dollar index was at 95, but after one year, it climbed dramatically to 104. The fluctuation in the value of the U.S. dollar has resulted in a wave of currency devaluation throughout the globe.

The thorn of the globalized economy has painstakingly spread to every nook and cranny, even while the benefits of globalization may not reach every country in the globe. From Detroit to Dakar, the plight of the masses persists.

For instance, the severe increase in consumer prices in the United States and in other affluent nations has progressively declined. That has increased expectations that the U.S. Federal Reserve would cease increasing interest rates to combat inflation, which has brought the world’s largest economy to the verge of recession and prompted other currencies to decline against the dollar.

The prolonged war between Russia and Ukraine poses a threat to Europe’s economy. Since 2021, gas prices in Europe have increased by more than fourfold, and Russia has restricted supply to less than 20% of their 2021 levels, causing energy shortages.

Nonetheless, the conflict has delayed or altered the economy in the developed world, but the situation is different in the developing world. For the Ukrainian people, the Russian invasion is a living nightmare, a horrific humanitarian catastrophe on a massive scale. But the war is rapidly becoming a question of life and death for the world’s most vulnerable populations. Additionally, because of the intricate interaction between geopolitics, commodities pricing, and financial markets, the conflict sent shockwaves across the global economy, especially in emerging markets.

For every emerging market and developing economy, growth projections for 2023 and 2024 have been lowered. Monetary policy tightening and restrictive global financial conditions are decelerating development, particularly in the developing world.

In addition, growth in low-income countries is anticipated to reach 5.1% in 2023. Despite this year’s overall improvement, estimates for around two-thirds of low-income countries have been reduced. In addition, per capita income growth is anticipated to moderate to 2.2% in 2023. Since the Ukrainian conflict, disruptions to global commodities markets, notably for energy and essential grains, have exacerbated cost-of-living pressures on low-income countries.

The developing world did not start the fire in Kyiv or send billions of dollars worth of arms to Ukraine, but it is feeling the brunt of the conflict. The conflict in Ukraine teaches us a terrible lesson: that the world’s economies provide all a person needs to survive, but they lack the ability to demonstrate rationality, provide equality, or stress humanity in order to determine right from wrong and ensure a secure existence. But we have the opportunity to build the genuine spirit of humanity via accountability. Nevertheless, we cannot ignore the pain of individuals in the developing world. We can only expect to build a society that is fairer and more equitable for everyone if we put an end to this insanity and restore global economic stability.

S.M. Saifee Islam is a Research Analyst at the Center for Bangladesh and Global Affairs (CBGA), Dhaka, Bangladesh.