A recent German study concluded that the ongoing Russian-Ukrainian war cost the global economy $1.3 trillion in 2022.
According to a study released by the German Economic Institute (IW) on Tuesday, Western economies have been particularly hard hit as they have lost two-thirds of their global output, according to The Meghalayan website, which was reviewed by Al Arabiya.net.
IW study co-author Michael Gromling said in a statement that the war has “significant global economic significance.”
He added that, above all, problems with energy supply and raw materials put pressure on companies around the world.
And in Germany, Europe’s largest economy, higher energy prices temporarily pushed inflation above 10% in 2022 before relief measures drove prices down again.
This happened before inflation stabilized at 8.7% in January, according to preliminary data released by the Federal Statistical Office.
“High energy prices have caused a production shock that has become an incalculable burden for many companies,” notes IW.
The institute pointed out that the resulting rise in consumer prices “led to a decrease in the purchasing power of households, which led to a reduction in their consumption.”
Finally, companies are reluctant to invest due to global uncertainty and rising prices.
In 2023, IW expects an additional $1 trillion in global value-added losses.
“Unfortunately, not everyone is in the game this year,” Grumling said, warning that raw material shortages and uncertainty “will continue to be a concern beyond 2023 and lead to further cost increases.”
For its part, the International Monetary Fund slightly raised its forecast for the global economy in 2023 last month, forecasting growth of 2.9% instead of 2.7%.
