Macroeconomic Impact of the War in Ukraine and of High Commodity Prices across Countries

The war in Ukraine was associated with large changes in the prices of key food and fuel commodities (wheat, maize, coal, gas, and oil) in 2022 which produced macroeconomic gains for exporters and losses as import costs increased. Across 49 countries benefitting, these gains averaged about 8 percent of GDP and reach up to 36 percent of GDP. In contrast, 125 countries suffered direct losses between 0 percent of GDP and 5 percent of GDP, and 10 countries losses between 5 percent of GDP and 10 percent of GDP. Economic performance was significantly worse among countries experiencing losses from the commodity price shock. An increase in the costs of imports of 1 percent of GDP was associated with lower GDP growth (minus 0.1 percent) and a weakening fiscal balance. Most significantly, GDP in countries experiencing losses in the form of higher import costs bought less when measured against the consumer price index (a loss of 0.75 percent for each percent of GDP in increased import costs). This price effect wiped out all gains from real GDP growth for high-income countries experiencing a negative commodity price shock and resulted in declining living standards for low-income countries relying on imports.