Ukraine war cost world economy over $1.6T: Study

The war in Ukraine cost the global economy "well over $1.6 trillion" last year, according to a study released Tuesday by the German Institute of Economics.

According to the study, global production losses could amount to another $1 trillion or so in 2023.

The institute's model calculation is based on gross domestic product (GDP). The fall forecasts of the International Monetary Fund (IMF) served as the basis for calculation and estimation.

For this purpose, the actual development of GDP in 2022 and the forecast for 2023 were compared with the originally expected development without the Ukraine war at the end of 2021.

The war has led to supply and production disruptions worldwide, the study said. In addition, energy prices have skyrocketed. Inflation has risen sharply everywhere, reducing consumers' purchasing power, it said.

"In view of the uncertain economic outlook, rising financing costs as a result of rising interest rates worldwide and the increase in the cost of capital goods, companies around the globe are holding back on their investments," it added.

For the current year, the authors of the study expect the absolute losses to be somewhat lower than in 2022. The reason for this is that an easing on the global raw material and energy markets is assumed.