Global Markets and Economy Can’t Escape War in Ukraine

“If your life still feels normal, ask if you are doing the right things… .”

Scotland’s First Minister Nicola Sturgeon made this observation about fighting Covid-19, but it also provides a useful lens to assess economic and market reactions to Russia’s invasion of Ukraine and what may come next.

Tragically, life has been upended for those who were living in a peaceful Ukraine only a few days ago. Now their country is under intense military attack and creeping occupation. Many fear for their lives. Others have become refugees.

Sadly, none of this is likely to change soon, notwithstanding the numerous acts of courageous resistance that have inspired people around the world. If anything, Russia may be tempted to intensify its attacks, going full out to secure control of a good part of Ukraine; and the more it does so, the harder it will be to contain and reverse the significant damage on the ground.

The longer and fiercer Russia attacks Ukraine, the more the West will be pulled into responding, albeit avoiding direct military confrontation. An initial wave of sanctions on Russia started to give way over the weekend to more powerful ones, including the exclusion of certain Russian banks from the SWIFT international payments system and sanctions on the central bank.