In the period since the Russian Federation launched a full-scale invasion of Ukraine, the Ukrainians have courageously stood up for their country and devoted themselves to the fight against the war. This lit a fire within people all over and gave thoughts about the security of not only Ukraine but for Europe and the world as well.
CIVITTA provided unique insights on the situation in Ukraine due to the presence of a strong team in the country and unique knowledge of the region. Numerous experts, economists and consultants including our CIVITTA colleagues have joined forces on the platform of the Center for Economic Recovery to conduct a rapid assessment of the costs of the war for the economies of Russia and Ukraine, all while informing the international community and giving a list of possible actions to help the country survive and win the war.
The war carries enormous risks for a world economy that is yet to fully recover from the pandemic shock. This invasion poses military costs, financial pressure, trade limitations and societal costs, which altogether pose a major loss in the economy, especially in Russia.
Regarding the financial costs for Russia, it was estimated in the first 18 days the Russian Federation had at least 17.5 billion dollars of direct military costs. Moreover, the enormous pressure of the economy led to an increase of 50% in the exchange rate of RUB per USD.
In regards to the trade limitations of Russia, a multitude of companies decided to introduce restrictions beyond government sanctions which caused a rupture in the export share, bottlenecks in future supply and delivery processes as well a decrease in sales. Some of the most prominent retail, transportation, automotive and technology companies decided to join this initiative which contributed to the rise of awareness worldwide.
The invasion of Ukraine postulated numerous questions regarding the societal impact on the Russian population. With the invasion of Ukraine, the Russian population gained uncertainty in their habitual routines. The airlines have suspended their incoming and outgoing flights with Russia and countries have closed their airspace for Russian flights, which consequently disabled the citizens of Russia from having the opportunity to travel. Moreover, numerous companies whose services were widely used by the Russian population have suspended their operations in Russia, disabling them to function normally in their day-to-day lives.
At the same time, Ukraine has been fearlessly and bravely fighting for its freedom and stability. However, the country still needs support from the international community to overcome all consequences of the war.
Some action recommendations included the imposition of a full-scale embargo on Russian oil and gas, the implementation of a full-scale disconnect of the Russian financial system from SWIFT, the exclusion of Russia from foreign capital markets and the support of private-sector efforts to diversify away from Russian counterparts.
The economy of Ukraine was already fragile due to the effects of the COVID-19 pandemic. With the current situation, it is measured that there will be prolonged consequences to it and there is an urgent need for international cooperation.
If you would like to receive more detailed information regarding the happenings in Ukraine and their economic and business impact, contact our team at [email protected]
More details of the study can be found in this report here, together with the daily updates here.