The first world economic war

Russia’s invasion & the aggressive economic sanctions in a deeply globalised world will lead to massive global economic disruption & structural change

For all the materiality of the economic shock due to Covid – G20 GDP contracted by 9% in the year Q2 2020 – government policy and successful vaccines were able to support a rapid global economic recovery.  But after dealing with pestilence, the world is now confronted with the economic consequences of war: a man-made economic crisis caused by the Russian invasion of Ukraine. 

Global economic forecasts are being marked down, and inflation forecasts are being marked up, on the back of soaring energy and commodity prices.  And in a structural sense, the Russian invasion and the international response will reshape the functioning of the global economic system.  This is the ‘end of the beginning’, as I noted recently. 

War by other means

The initial Western response to the Russian invasion was to provide additional military support to Ukrainian forces, who are fighting with remarkable courage and results.  But over the past week or so, this has become an economic war against Russia for the US…