The Economic Impact of the Ukraine War

Jeong Minhyeon 

(mjeong@kiep.go.kr)

Associate Fellow, 

Russia-Eurasia Team, Korea Institute for International Economic Policy

English Abstract

Economic uncertainty is growing due to the prolonged Ukraine war. Although the direct economic impact on Korea seems limited, the deepening inflation and falling net exports, mainly due to soaring fossil fuel prices, are expected to weigh on the Korean economy. Another concern is inflation pressure led by disruptions in the supply of international raw materials. The worsening supply condition triggered by the war has induced the U.S. and other major economies to tighten their currencies beyond market expectations. As a highly dependent on foreign countries, the Korean economy must respond to structural changes in the global trade environment: a contraction in Russia's real economy, changes in trade structure by country and region due to precipitated deglobalization of the world trade, and the possibility of a contraction in global trade. ​