The full-scale war in Ukraine is sending shockwaves far beyond its borders. In today’s interconnected world, the war has real, measurable consequences for the global economy—and it stands as the largest confrontation in Europe since World War II. But just how deep are the costs of Russia’s aggression, and who is paying the price?
Assessing the war
By launching a full-scale war against Ukraine, Russia shook the foundations of stability in Europe and sought to fundamentally reshape the global order. The impact spans every geopolitical dimension—economic, military, trade, and beyond.
Analysts at the London-based Centre for Economic Policy Research (CEPR) set out to estimate the toll of Russian aggression, drawing on macroeconomic forecasts from countries across the region. Their study looked at both the short- and long-term consequences for Ukraine and Russia, as well as neighbouring states.
The research drew on macroeconomic projections from 29 countries in Eastern Europe and Central Asia, compiled by Consensus Economics. Rather than focusing on actual outcomes, the analysis examined expert expectations, tracking quarterly forecasts from January 2022 with a horizon of up to five years.
Expectations at the outset
At the start of the full-scale war, forecasts painted a grim picture for both Ukraine and Russia. Each was expected to lose up to 15% of its GDP annually compared with 2021, with prices projected to surge by as much as 25% during the first year of fighting. The causes, however, differed: Ukraine’s losses stemmed from occupation and widespread combat, while Russia faced the fallout of sanctions and international isolation.
Interestingly, Russia was predicted to experience a sharper drop in private demand than Ukraine, given its sudden spike in military spending, whereas Ukraine was set to benefit from substantial foreign aid.
Ukraine was also expected to see a widening trade deficit due to rising imports. Russia, in contrast, was forecast to increase exports, buoyed by higher energy prices.
For Eastern European countries, the effects were projected to be similar but far less severe. On average, the war was expected to add seven percentage points to inflation and reduce production by 10.8%, with declines in both investment and consumption. The main driver of losses was these countries’ reliance on imported energy—the cost of severing ties with Russian oil and gas while finding alternative markets proved steep. Overall, the impact on Eastern Europe was expected to be serious, though not catastrophic.
Losses in individual countries
Overall, the total losses were substantial. The 29 countries studied forecast a combined GDP decline of $2.44 trillion over 2022–2027—almost 45% of their total GDP in 2021. Ukraine has borne the brunt, with losses reaching a staggering 193% of GDP, or $386 billion over six years, representing the largest relative hit for any single country. Russia faces the largest absolute losses, with a projected decline of 92.4% of GDP, or $1.69 trillion, over the same period. Belarus, closely tied to Moscow and hit by sanctions on the Lukashenko regime, is expected to lose 47.1% of GDP, or $32.1 billion. In the Baltics, Lithuania, Latvia, and Estonia are projected to see losses of 8–20% of GDP due to their dependence on Russian energy.
Meanwhile, countries in the Caucasus and Central Asia, including Armenia, Georgia, and Kazakhstan, are facing declines of 10–33% of GDP, largely driven by reduced trade volumes. The pattern is clear: the countries closest to the frontlines bear the heaviest costs. Over time, however, the war’s impact on other nations—beyond Ukraine and Russia—gradually diminishes. Russia faces a prolonged slowdown in growth, while Ukraine’s outlook is comparatively brighter, supported by the prospects for major post-war reconstruction investment.
Reality is worse than the forecast
How close were the initial estimates of the war’s cost? For Ukraine, the reality has been far harsher. By 31 December 2024, the World Bank put the country’s losses at $524 billion. The brunt was borne in the opening months: from February to June 2022 alone, Ukraine lost $349 billion, with a further $175 billion added between June 2022 and December 2024—nearly matching the country’s entire GDP in 2021.
While the heaviest losses came early, driven by rapid territorial occupation, the toll has continued to rise. The most devastating losses—the lives of Ukrainian soldiers and civilians—remain beyond any financial measure.
If future losses roughly mirror the pace seen from mid-2022 through 2024, each additional year of war could cost Ukraine around $70 billion. That would equal 38% of nominal GDP in 2024, or 35% of the same measure in 2021.
It is difficult to accurately gauge Russia’s losses, given the secrecy surrounding much of the country’s economic data. After the invasion began, Moscow reported only a modest 2% GDP drop in 2022 and spent the following years boasting of economic growth. Yet by mid-2025, senior officials were warning of “exhausted resources” and hinting at a potential year-end recession. Russia’s estimated losses of $1.69 trillion for 2022–2027 will likely be realised—and may even exceed expectations—but they are unfolding over a far longer timeline than Ukraine’s.
Beyond the immediate figures, the war represents a massive opportunity cost for Russia. By launching a full-scale invasion, Moscow effectively abandoned the vast European energy market, which it had been cultivating since the Brezhnev era. Without the war, Russia could have continued selling oil and gas to Europe while simultaneously expanding into Asian markets like India and China. Instead, it is increasingly clear that economic prosperity and the well-being of the population are not priorities for Putin’s regime.
Avoiding past mistakes
Looking at how Ukraine’s losses have unfolded, it’s becoming clear that the initially projected total of $2.44 trillion will almost certainly be an underestimate. But the cost of Russian aggression extends far beyond Ukraine and Russia themselves, affecting countries not even included in the list of 29 analysed. Take Germany, for example. After decades of tying itself closely to Russian gas, it now faces the severe consequences of that dependence, grappling with a sharp surge in energy prices that continues to ripple through its economy.
The broader picture challenges the idea that the Russian-Ukrainian war is a problem confined to the two belligerents, one in which the rest of the world need not intervene. In reality, a rapid collapse of Ukraine would have likely imposed even greater losses on Europe and the global economy, particularly if, over time, Russia had extended its aggression toward Moldova and NATO’s eastern-flank countries. The fallout shows just how interconnected the stakes are—and how costly inaction could have been.
Ukraine’s European, American, and other partners need to recognise that they cannot count on pacifying Russia through its integration into the global economy. The notion that trade would enrich Russia, discourage it from risking its wealth, and therefore prevent it from waging war has already proven to be flawed.
Any potential temporary ceasefire will be a serious test—not just for Ukraine and Russia, but for all parties with a stake in the outcome. If the US, Europe, and other countries were to lift sanctions, resume trade with Moscow, and scale back support for Ukraine, it would almost certainly embolden Putin to launch a new offensive—one with a far greater chance of success than the current conflict.
