The ongoing Russian invasion of Ukraine has dealt death, injury and destruction to hundreds of thousands around the globe. Wars like these often create a myriad of strategic issues specifically in the realm of economics. As we’ll discuss below, when economies are affected, so are those involved in migrating via investments.
With the world not yet able to fully recover from the onslaught of COVID-19, the Ukraine Russia conflict only adds to the world’s inability to properly economically re-stabilize from the impacts of the pandemic, especially with additional issues like global warming, a lack of structural government in countries like Haiti and widespread pollution. This attempt on behalf of governments to constantly juggle multiple issues at once requires economic action in the form of sanctions, millions of dollars in aid and others.
Because of this, the ongoing conflict in Ukraine is quite troublesome for the global economy, with organizations like the IMF stating the Ukrainian GDP could drop by as much as 25-30% in the coming months. Russia’s GDP is also dropping at a relatively rapid pace (10-15%+) due to international sanctions and the pulling out of global corporations operating in the country.
Now, what does this mean for the world as a whole? Below, we’ve identified four of the main economic effects of the conflict in Ukraine.
Economic Effects of the War in Ukraine
1. Increase in common goods such as food, particularly those with Ukrainian supply chain
links like food products from wheat, fertilizers, corn, and others.
2. Increase in oil/coal prices around the globe.
3. Increase in military spending in the West. Germany recently announced an increase in defense spending (100 billion euros) with the United States also pledging to increase its defense expenditure.
4. Rise in interest rates from the tightening of new money created by central banks wanting to reduce inflation without financial risk.
The impact of these effects cannot be understated. Looking back at the 1980 debt crisis in Latin America for example, we know highly indebted countries are normally close to a default on their external debt. We saw this in the Bolshevik Revolution in 1918 as well.
Additionally, in response to these major economic changes, Ukraine will need to spend more on housing, education and trade, among others. The effort to globalize the economy is now more fragmented than ever, with its probability lessening in the years to come.
Specifically speaking on investment migration, these massive global economic changes will only make things more uncertain for those wanting to invest in an economy to migrate to another area of the world. Below, we’ve listed three things for you to consider when investigating investment migration during these times.
Things to Consider - Investment Migration
1. Especially once the War in Ukraine is finished, expect an increase in demand for investment migration. Financial and geopolitical risks have increased more than ever as a result of the war, with economic sanctions only making matters worse as well. For those wanting to relocate, they’ll have to pay a premium to live and work in a secure and economically stable environment.
2. Citizens from countries with demand from Russian citizens will dramatically reduce their supply of investment migration solutions, considering the ban on Russian citizens is applied for citizenship/residence programs.
3. The receding of programs by cross-border groups like the European Union, for example, will restrict the scope of these investment migration programs.
In regard to investment migration, the times have changed dramatically. Just ten or so years ago, we saw the golden age of investment migration. Now, however, the global stage has been negatively economically impacted.
Governments heavily relying on investment migration programs for the benefit of their economy will expedite further these programs in an effort to recover from both the COVID-19 pandemic and the War in Ukraine. In doing so, governments must be careful to adapt with the times and not restrict their investment migration programs, but instead open them up.
With investment migration programs comes the opportunity for countries to more quickly recover from unfortunate events like those of COVID-19 and the War in Ukraine. If managed correctly, however, investment migration may surpass its golden age just a few years prior, building up the global economy in the process.
So, if you are interested in finding out more about todays topic about investment migration, contact us today! Below this article you will find a link to set up a free fifteen-minute consultation with us to discuss your options further.
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