Already more than 3 million people have fled Ukraine with more waves of refugees expected in the weeks ahead. So far, refugees have primarily gone to a small number of neighbouring countries. Burden sharing and EU support to the major host countries will be needed for support to be delivered more effectively and sustainably.

Amid the uncertainty, the OECD estimates global economic growth could be more than 1 percentage point lower this year than was projected before the conflict, while inflation, already high at the start of the year, could be higher than it would have been if war had not broken out by at least a further 2.5 percentage points on aggregate across countries.

The chart shows the potential impact on GDP and inflation.

With Russia supplying around 19% of the world’s natural gas and 11% of oil, energy prices have jumped alarmingly. Europe in particular is highly dependent on Russian gas and oil. Gas spot prices in Europe are now more than 10 times higher than a year ago while the cost of oil has nearly doubled over the same period. The price shock risks increasing poverty and disrupting the production of goods and services worldwide.

Commodity prices have risen sharply. Russia and Ukraine are important producers of wheat, fertilizers and metals used in industry such as nickel and palladium. Disruptions to wheat, maize and fertiliser risk raising hunger and food insecurity across the world in particular in emerging market and low-income countries. Soaring metals prices could affect a wide range of industries such as aircraft, car and chip manufacturing.