Prosperity growth in Europe slowed and even reversed in the United States before the world felt the full economic consequences of Russia’s war against Ukraine, statistics from the first quarter of 2022 showed.

The main reasons are not related to the war, since only the last of the three months of the quarter fell on the Russian invasion. However, the trend confirms the first estimates of economists who promise damage not only for Russia and Ukraine, but for the whole world, and especially Europe.

In January-March, the growth of the European economy slowed down by 0.1 percentage points to 0.5% in 27 EU countries and to 0.2% in 19 countries of circulation of the euro single currency. In the US, the first quarter was marked by a 0.4% decline in GDP.

The slowdown in business activity is caused by the fact that its surge after two years of lockdowns led to a shortage of energy, food and transport at the end of 2021. This caused disruptions in world trade and fueled inflation. Consumption is falling because life becomes more expensive and people save, and investments are reduced, because lending rates rise after prices.

The war will only exacerbate these problems, since Russia is the largest exporter of oil and gas, and together with Ukraine they are also the leading suppliers of food. Therefore, Vladimir Putin’s decision to send troops to conquer a neighboring country turned into a new round of growth in world oil, gas, coal, grain, oil, metals and everything else.

As a result, according to the estimates of the International Monetary Fund, the growth of the world economy this year will not exceed 3.6% , while back in January the IMF predicted 4.4%. In other words, the world will come to the end of the year poorer than it could be without war.

First of all, Ukraine will suffer, to which the IMF reads a loss of 35% of GDP, and Russia, which attacked it, which, under the conditions of sanctions, the flight of business and people, is threatened with an 8.5% decline. The wave of this crisis will come first to their European neighbors, both the IMF and the OECD club of rich countries warn.

“On the one hand, Russia and Ukraine play a small role in the global economy. They account for no more than 2% of GDP and about the same amount of world trade,” write OECD economists. “On the other hand, they have an important impact on the global economy as leading suppliers of a range of products.”

“Some regions will feel the impact of these problems more than others and will hit European countries more than others, especially those bordering Russia or Ukraine,” write OECD experts, pointing to close trade ties and high gas prices in Europe, the result of partial energy blockade by Russia in the months leading up to the attack on Ukraine.

Germany and Italy will suffer more than others, agrees the IMF, which lowered its forecast for eurozone GDP growth to 2.8% from 3.9%.

Leading EU economy Germany, like third largest Italy, are industrial powers and heavily dependent on Russian oil and gas. The second largest EU country, France, buys hydrocarbons mainly not in Russia, but thanks to nuclear energy, it also exports electricity.

It will only get harder from there. The downgraded IMF and OECD forecasts are based on the current situation and take into account the fighting on the eastern borders of the EU, which has led to higher prices, caused the largest influx of refugees since World War II and forced to increase defense spending.

But these forecasts do not take into account another war – the energy one. It promises the European economy much more damage. Its first volleys were fired this week when Russia cut off gas to Poland and Bulgaria. And the response is scheduled for the next one, when the European Union will consider expanding sanctions, including an embargo on Russian oil .

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