
In light of these developments, a key question is: How much will geopolitical tensions weigh on economic activity in 2022 and beyond? Commodity markets are in turmoil and financial markets have been highly volatile since the start of the conflict. The economies of Russia and Ukraine are contracting sharply as a direct result of the war and the sanctions imposed on Russia. 2 As an example of these concerns, the April 2022 edition of the International Monetary Fund's World Economic Outlook contains more than 200 mentions of the word "war." Some economic effects are already materializing. Investors, market participants, and policymakers expect that the war will exert a drag on the global economy while pushing up inflation, with a sharp increase in uncertainty and risks of severe adverse outcomes. Global geopolitical risks have soared since Russia's invasion of Ukraine. The Effect of the War in Ukraine on Global Activity and Inflationĭario Caldara, Sarah Conlisk, Matteo Iacoviello, and Maddie Penn 1


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