What’s the outlook for the Russia-Ukraine war?

Changing fortunes: On the eve of struggle simply over a yr in the past, our Consensus Forecasts had been for Ukraine and Russia to document GDP progress of three.4% and a pair of.6% respectively in 2022. Today, the scenario is relatively totally different. Ukraine’s economic system seemingly contracted by roughly a 3rd final yr, as a consequence of sustained infrastructure injury, export disruption, plummeting funding and mass migration. Russia’s GDP additionally shrank—albeit by lower than anticipated—as commerce ties with Europe and the U.S. had been severed.

No fast repair: Our panelists have little religion in a swift decision to the battle: In a recent special survey we conducted, the vast majority—89% of the 28 analysts polled—didn’t count on the struggle to finish in 2023. With Zelensky more and more aided by the army heft of the West and Putin eager to have one thing to indicate for his invasion, neither chief seems in the temper to again down.

Military dangers: Predicting the evolution of the battle entails vital uncertainty. Risks equivalent to a step-up in NATO’s army help to Ukraine, Chinese arms gross sales to Russia, the deposition of Putin and/or Zelensky, Belarus’ involvement in the struggle and energy price volatility all have the potential to tip the steadiness of the struggle in a single route or one other. But in the close to time period, stagnation nonetheless seems the almost certainly situation.

Low-to-no progress: This dim view of the army scene explains our equally downbeat forecasts for each Russia and Ukraine’s economies. Russia is projected to contract once more this yr, as vitality costs development decrease and the noose of Western sanctions tightens; the EU banned Russian crude imports in December and oil derivatives from February, whereas the G7 has just lately introduced worth caps on Russia’s vitality exports. Ukraine will see progress, however this can largely replicate the low base of comparability— the economic system will stay far under its pre-war measurement, and a major rebound in output might be not possible till the depth of the combating eases. Pre-war financial situations won’t return in both nation for years—and even a long time.

Insights from Our Analyst Network

On the struggle, Mark McNamee, director, FrontierView, stated:

“The war is unlikely to end until either the collapse of either the Zelenskiy regime in Kyiv or the Putin regime in Moscow. Where we sit today, neither seems likely unless there is a major successful offensive by either side this spring.”

On Russia’s financial outlook, analysts at Berenberg stated:

“Having started a brutal war, Putin has no easy way out. Ukraine and the free world are standing up to him. The expenses of war, the slow poison of sanctions, the flight of parts of the urban elite and the mounting costs of repression will be a worsening drag on Russia as long as Putin remains in power.”