Destroyed lives, destroyed homes and destroyed infrastructure are the immediate consequences of Russia's aggression in Ukraine. The war also imperils the world's economic recovery from the COVID-19 pandemic: inflation, food security, energy security and further supply-chain pressures are among the many challenges policy makers worldwide must tackle. As the global ramifications of the invasion take hold, the OECD is bringing together its latest insights, analysis and data on the policy challenges ahead.
Ukraine's ambitious regional development reforms since 2014 have overhauled the country's governance structures, which have been key to its regional and municipal resilience in 2022.
While Russia’s war of aggression against Ukraine has severely undermined progress and exacerbated existing territorial disparities and governance challenges, continued reform will be vital to Ukraine's post-war reconstruction efforts.
> Explore the OECD's new Policy Response:
Russia’s war of aggression against Ukraine has triggered the biggest energy price shock since the 1970s, which is weighing heavily on the world economy.
The estimated share of GDP spent on energy end-use has spiked, up from under 9% in 2020 to over 16% in 2022. The impact of price hikes and disruptions on GDP growth is estimated at -1.4% in OECD Europe and -0.5% in the world economy (Chart 3).
Prospects for world growth could deteriorate further if European gas storage runs short (Chart 2), forcing potential rationing of energy while pushing global gas prices even higher.
The global economy is expected to slow further in the coming year, with the energy shock resulting from Russia's large-scale war against Ukraine fuelling inflation, sapping confidence and increasing risks worldwide.
The inflow of Ukrainian refugees – many of whom are highly-educated women – is having a measurable impact on Europe's labour force. Accounting for their skills and requirements is key.
Citizens, NGOs, the private sector and government services having rallied to provide housing for Ukrainian refugees – but the transition to long-term accommodation is a looming challenge.
Targeting support to the most vulnerable households is more effective than attempts to lower energy prices – while reinforcing the energy transition (and minimising pressure on government budgets).
Assessment the immediate impact of Russia’s war against the people of Ukraine on global financial markets, and the continuing potential for spillovers into those markets.
Unprecedented policy responses and companies' decisions in response to the war are raising manifold implications for international investment policy, and capital and investment flows.
Yuriy Butsa, Ukraine’s Government Commissioner for Public Debt Management, discusses the country’s funding challenges in a time of war with the OECD’s Fatoş Koç.
Russia's invasion of Ukraine has unleashed a humanitarian crisis, while food insecurity is on the rise. Laurence Boone discusses the actions governments can take to help.
According to the UNHCR and UNICEF, “education for refugee children is arguably the best means available to help them to transform their futures.” Viivian Jõemets and Lucie Cerna share their views.
For multinational enterprises (MNEs) doing business in Russia, the prospect of difficulties making international payments, reduced access to foreign capital, and logistical challenges – as well as reputational risks – has led many MNEs to curtail their activity in Russia.
As of July 2022, 25 foreign MNEs covered by the OECD Analytical Database on Individual Multinationals and their Affiliates (ADIMA) had announced their exit from Russia and 113 had suspended or scaled back their operations in the country, while 29 continued business as usual.
By sector, nearly one-third of energy and utilities companies and one-fifth of technology and industrial companies announced their complete withdrawal from the Russian market, compared to less than 10% of finance and healthcare companies. Most consumer goods MNEs continue to maintain some presence in Russia, with many citing their provision of essentials such as food and hygiene products.
Since Russia began its war of aggression in February 2022, almost five million Ukrainian refugees have fled to EU and other OECD countries.
Poland, Germany and the Czech Republic have received the largest numbers of migrants, taking in 1.4m, 1m and 400,000 refugees, respectively. Relative to total population, Estonia and the Czech Republic have received more than 40 refugees per thousand inhabitants, with Poland (36 per thousand), Lithuania (23 per thousand) and Latvia (20 per thousand) close behind.
Continued bold action in receiving and supporting these historic refugee flows is critical.
A new OECD report describes how reforms to regional and local governance arrangements since 2014 helped build resilience, and how those foundations can be reinforced to accelerate the country’s post-war recovery.
Ukraine participated in the Public Governance Ministerial: Building Trust and Reinforcing Democracy, which featured a session on the impact of Russia's war in Ukraine on democracy and good governance.
Ukraine and the OECD have been working closely together since 1991 to improve governance and economic development. A Memorandum of Understanding for Strengthening Co-operation (MoU) was signed in 2014 to drive forward efforts to address the country's public policy challenges.
The OECD draws on its multidisciplinary expertise, policy best practices and cross-country data analysis as part of on-going efforts to support Ukraine's reform efforts and strengthen its institutions.
The OECD Council, comprising the Organisation's 38 member countries, condemns Russia's large-scale aggression against Ukraine as a clear violation of international law and a serious threat to the rules-based international order.
The participation of Russia and Belarus in OECD bodies has been suspended, while the Organisation is working on new measures to strengthen support for the democratically-elected government of Ukraine, including for recovery and reconstruction.
See official statements:
> OECD Council statement, 24 February 2022
> OECD Secretary-General: initial measures, 25 February 2022
> OECD Secretary-General: further measures, 8 March 2022