The Echoes of Conflict: Analyzing the Potential Impacts of the Russia-Ukraine War on Africa

Abstract

This paper analyzes the potential repercussions of the Russia-Ukraine war on 44 African countries using a global vector autoregressive model. Focusing on the unexpected rise in global prices for food, oil, and fertilizers triggered by the war, we simulate the effects of these shocks on commodity terms of trade, consumer price inflation, real GDP, and the domestically deflated dollar exchange rate. Our findings suggest that most African countries will face a deterioration in commodity terms of trade, inflationary pressures, a decline in real GDP, and reduced domestic purchasing power of the U.S. dollar, with the effects potentially lasting beyond 3 years. The study reveals Africa’s vulnerability to global commodity price swings but also highlights the opportunity for the continent to reduce its dependence on imports and promote self-sufficiency in critical sectors.