The Crisis in Ukraine Will Cost the Global Economy 6.5% of GDP

(20 May 2022) Sanctions against Russia coupled with the partial ban on imports of Russian oil and natural gas by the U.S. and its closest allies led to significant shortages of energy commodities in EU and US. In April 2022 compared to the start of 2019 world prices for coal increased over 230%, price for natural gas and crude oil rose by 205% and 83%, respectively.

• According to Thunder Saudi Energy, energy expenditure across the globe will likely reach all-time highs of $13 trillion in 2022, representing 13% of global gross domestic product (GDP) due to soaring energy prices.
• Compared to 2021 the ratio of global energy expenditure to world GDP will increase by 6.5 percentage points (from 6.5% to 13% of GDP). Final demand expenditure equivalent of 6.5% of global GDP, that would have been spent by households and businesses to purchase goods and services and increase investment in fixed assets, instead will be paid to energy producers. Higher pricers for other commodities like food, fertilisers and metals also subdue economic growth.
• Unlike to coronacris central banks and governments don't have much room for fiscal and monetary stimulus, that increases the probobility of global recession.