The war in Ukraine is shaping economic trends in Europe and around the world by driving higher inflation, slower growth, and an energy crisis that foreshadows a tough winter if current trends continue.
However, many of the 450 economists, business sector representatives, and other experts surveyed by the PwC Economic and Business Consensus believe that the war in Ukraine could end in the next few months with a partition of this country, with the Donbas territory going to Russia and Ukraine getting closer to the European Union and the North Atlantic Treaty Organization (NATO).
This is the opinion of 40.3% of those surveyed, although 28.1% disagree. They believe that the conflict will drag on for several years and become a war of attrition in which the West will continue to support Ukraine militarily and economically. The scenario that practically nobody foresees is that Ukraine will succeed in driving Russian troops out of the country without ceding any territory. According to 68.4% of the survey participants, economic, commercial, and financial sanctions against Russia could be gradually lifted if it agrees to end its invasion.
More than half (52.2%) of those surveyed are very concerned about the severe economic, political, and security impacts of the invasion of Ukraine, and 43.5% see these impacts as the biggest threat to global economic growth. Rising interest rates in the US and Europe were also cited as a major concern by the survey respondents, while the slowdown in China’s economic growth was less worrisome.
Impact on Spain
Regarding the economy in Spain, where the survey was conducted, about half of those surveyed think that the war will slow economic growth significantly, while 39.1% believe that GDP will continue to increase. Another 31.3% estimate that the war in Ukraine will have a severe impact on Spain and will ultimately cause a recession in late 2022 or early 2023. When asked if they think that the current economic and political situation will lead to stagflation in Spain, 63.5% say that it is too early to tell.
The war’s most significant impact on the Spanish economy will be an increase in energy prices, said 50.4% of those surveyed, followed by general economic uncertainty and an increase in food prices. Regarding Europe’s energy strategy, 74.8% of the survey respondents are in favor of developing a medium-term plan for the European Union to gradually reduce its dependence on Russian hydrocarbons.
Most of those surveyed are pessimistic about Spain’s economy next year, and are scaling back their GDP growth forecasts from 4.3% to 4% in 2002, and from 3.9% to 3% in 2023. They expect inflation to remain at 6.6% for the remainder of this year and drop to 4.3% by June 2023.
This outlook led 63.4% of the survey respondents to say that their companies and others in their economic sector will continue to increase prices in the coming months due to higher, non-labor operating costs.