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Governments are not sufficiently aware of the longer-lasting economic fallout from Russia's invasion of Ukraine, OECD Chief Economist Laurence Boone said.
“I really believe we're underestimating the medium-term impact of this war,” Boone told Bloomberg Television in Cernobbio, Italy, on Friday. “The longer the war will last, the more uncertainty we have and the more worried we're getting because uncertainty deters consumer purchases and business investment.”
Earlier this month, the Paris-based OECD estimated that the conflict's effects will take more than 1 percentage point off global growth this year and drive up inflation by a further 2.5 percentage points from already-high levels.
“We will have long-lasting consequences on energy security, food security, digital security, payment systems, trade,” in addition to the problem of increased refugee flows all over the world, Boone said.
If the number of people fleeing Ukraine reaches 5 million, the costs of helping them settle in and adapt could reach 0.5% of the European Union's gross domestic product, she said, with about 12,500 euros ($13,835) typically needed per refugee.
“It's a lot, but it's really worth it,” she said.
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