The world can not overlook the immediate toll of the Russia-Ukraine war and broader concerns about the region’s economic stability in the face of prolonged conflict.
The ripple effects of the ongoing conflict, from disrupted trade to increased defense spending, reverberate across borders, amplifying the economic challenges faced by all.
European Bank for Reconstruction and Development (EBRD) has warned that the ongoing war is an increasing threat to Ukraine economy.
The EBRD stated that the war is taking its toll on power plants and has forced Kyiv to send key workers to the frontline.
In its latest economic update, the EBRD cut its growth forecasts for the regions in which it operates from 3.2% to 3% this year.
It also said that more than two years of fighting in Ukraine was affecting not only the warring countries but also their neighbours.
“Geopolitical tensions are having a profound impact on the EBRD regions and beyond, leading to rapid fragmentation of trade and investment and a notable rise in defence spending,” it said.
Beata Javorcik, the EBRD’s Chief Economist, noted that the war was “casting a long shadow.”
Javorcik said, “The war has intensified. Mobilising additional men to fight will hit the economy, and the destruction of power generation is something that will have repercussions. The situation is challenging.”
“The war is the big unknown. In the initial phase of the war the military fighting took place in an area that generated 60% of Ukraine’s economic activity. Subsequently, the fighting moved to a much smaller area. If the area affected by the fighting goes back to the early days of the war that would take its toll of the economy.”
Beata Javorcik
Moreover, Javorcik noted that while the short-term outlook for Russia has improved, “in the medium term, Russia is going to feel the effects of the war.”
“Sanctions and the impact of the brain drain will affect its productivity growth,”Javorcik added.
Russia Aims At Balancing Efficiency with Innovation
Meanwhile, the battlefield of the 21st century is as much a domain of information and ideas as it is of bullets and bombs. In the digital age, where information is power and technology is a force multiplier, traditional approaches to warfare are becoming increasingly obsolete.
Success will be determined not just by the size of one’s arsenal but by the sophistication of one’s strategy.
As such, Russia’s incoming Defense Minister, Andrei Belousov stated that defense spending needed to be optimized so that “every ruble of budget money, which is ultimately paid by our citizens, brings maximal effect.”
“Everything in the country that is effective and advanced – everything must work to achieve victory, to ensure the armed forces can complete their tasks,” he said.
Also, Belousov said that Russia needed to work out “new methods of waging warfare” in order to stay ahead.
“The enemy is learning quickly. The situation related to the use of new technologies changes literally every week. And here we need not just to learn, we need to preempt the enemy.”
Andrei Belousov
In addition, he disclosed that Russia’s main task is to achieve victory on the battlefield in Ukraine with the minimal loss of troops.
Belousov, an economist whom President Vladimir Putin nominated to replace Sergei Shoigu, asserted that the military sector needed more efficiency and innovation in order to achieve its goals.
Neither Russia nor Ukraine publishes details of their dead and wounded.
However, Western military analysts claim that Russia, with a population more than three times larger than Ukraine’s, has shown itself much more willing to incur heavy casualties for the sake of even incremental gains.
Russian officials say such analysis, as it comes from the West, is neither objective nor accurate.
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