A simulated 40% reduction in bilateral trade with Russia in all goods and services would have a notable negative real income effect on households in some European G7 countries in the medium term. However, households in Russia would have to withstand a significantly larger negative impact – roughly double the effect of eliminating oil dependency on Russia.
At least 70% of Russia’s imports of, among other items, electronics, motor vehicles and parts, machinery and equipment, chemicals, and business services are from the G7, Europe and Australia. Together, restrictions on exports to Russia from these countries would have an almost 50% larger impact on Russian household income than if these countries restricted imports from Russia.
This also highlights an important point: the benefits of trade – and here the harm potentially inflicted with trade sanctions – is at least as much about Russia's imports as it is about its exports.
One year on from Russia's full-scale invasion of Ukraine, the OECD's solidarity remains undiminished.
Within hours of the invasion, the OECD Council condemned Russia’s large-scale aggression against Ukraine in the strongest possible terms as a clear violation of international law and a serious threat to the rules-based international order, expressing its solidarity with the Ukrainian people.
See official statements:
> OECD Council statement, 24 February 2022
> OECD Secretary-General: initial measures, 25 February 2022
> OECD Secretary-General: further measures, 8 March 2022
Since February 2022, the OECD has continued to broaden, deepen and strengthen its engagement and cooperation with Ukraine, building on several decades of work. A new OECD-Ukraine Liaison Office was established in Paris.
The OECD has worked with Members to support the reception and integration of Ukraine’s refugees and displaced persons, and to help address their needs with a particular focus on educational and employment continuity. It has worked with donors and other partners on the international coordination of support to Ukraine. It has worked closely with the government of Ukraine in support of its rebuilding, reconstruction and reform agenda.
In 2022, the OECD formally recognised Ukraine as a prospective Member, committing to an initial accession dialogue designed to increase its adherence to OECD standards and participation in OECD bodies. It welcomed President Volodymyr Zelensky, virtually from Kyiv, to the Organisation's annual Ministerial Council meeting and Prime Minister Denys Shmyhal to the final Council meeting of 2022.
> Read more about the OECD and Ukraine partnership
> Explore the latest OECD analysis on the impact of the war
On 24 February 2023, OECD Secretary-General Mathias Cormann announced the official opening of the OECD-Ukraine Liaison office in Kyiv, hosted by the Embassy of the Slovak Republic to Ukraine in Kyiv, with the financial support of Poland, Lithuania, Latvia and Romania, as well as of the Slovak Republic.
The immediate focus must remain on securing a comprehensive, just and lasting peace for the people of Ukraine, consistent with international law and with the terms of the UN resolution passed with the overwhelming support of its Members.
In the meantime, the OECD will continue to support Ukraine’s determined efforts to plan and prepare for the reconstruction and recovery effort, to help rebuild better and stronger, consistent with the values of a free, open, market-based democracy and the high standards expected of a prospective Member of the OECD.
At full capacity, there will be a team of four OECD officials on the ground from Kyiv who will:
coordinate the implementation of a new OECD-Ukraine Country Programme
continue the initial accession dialogue with Ukraine as a prospective OECD member country
More than 12 months following the commencement of Russia’s war of aggression against Ukraine, Brent crude oil was trading between USD 80 and USD 84 a barrel at the beginning of March 2023, having spiked to USD 133 a year earlier. Wholesale prices for natural gas and coal have seen similar volatility in the same period.
However, even as energy price rises have eased off their highs, the outlook for the world economy remains fragile. Trade tensions, financial vulnerabilities and high core inflation – driven by strong service price increases and cost pressures from tight labour markets – point to persistent downside risks.
Structural reforms aimed at boosting productivity growth will be vital, alongside fiscal support targeted at the most vulnerable and monetary policy to combat persistent inflation.
How should policymakers assess global value chain risks? A new OECD paper looks at the economic dependencies and implications for policy.
Many of the 4.7m refugees registered in the EU by mid-November have high formal qualifications, but early employment has been in low-skilled jobs – putting the challenge of skill transferability under scrutiny.
Supply shocks have driven up energy prices and inflation – which in turn is leading to increasing borrowing costs. This is leading a weakening outlook for government revenues.
Ukraine's ambitious regional development reforms since 2014 were key to its resilience in 2022. Continued reform will bolster its post-war reconstruction efforts.
OECD countries can build on new and strengthened scientific relationships to relaunch science in Ukraine and support the country’s recovery after the war.
Systematic information manipulation and disinformation have been part of Russia's operational toolkit in its assault on Ukraine. How should democracies respond?