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The Economic Impact of Russia's Invasion of Ukraine on European Countries – a SVAR Approach

Author

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  • Jonas M. Bruhin
  • Rolf Scheufele
  • Yannic Stucki

Abstract

We quantify the economic impact of Russia's invasion of Ukraine on Germany, the United Kingdom, France, and Italy using data on historical geopolitical events. Employing a structural VAR approach based on zero, sign, and narrative sign restrictions, and accounting for regional shocks to capture country‐specific effects, our analysis reveals a drag on real economic activity and a significant increase in inflation due to the war. In a counterfactual scenario without the invasion, we find that consumer prices in European countries would have been 2.3% to 5.8% lower in 2023‐Q4. Additionally, global consumer prices would have risen 2.5% less, and energy prices would have been 24% lower. The war also triggered a significant decline in both global and local economic sentiment, resulting in lower consumer confidence and reduced global demand. Without the war, GDP in European countries could have been between 1.4% and 2.4% higher by the end of 2023.

Suggested Citation

  • Jonas M. Bruhin & Rolf Scheufele & Yannic Stucki, 2026. "The Economic Impact of Russia's Invasion of Ukraine on European Countries – a SVAR Approach," Review of International Economics, Wiley Blackwell, vol. 34(4), pages 991-1012, September.
    • Handle: RePEc:bla:reviec:v:34:y:2026:i:4:p:991-1012
    DOI: 10.1111/roie.70064
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