With the outbreak of the war in Ukraine in early 2022, experts from the consulting firm McKinsey identified 12 trends with a disruptive capacity never before seen. Six months later, they have reviewed these forecasts by analysing the actual scale reached by each of these trends, their duration, the impact of government policies, consumer action and business response.

The first and most serious consequence of the war has been a humanitarian crisis the likes of which has not been seen since the Second World War. Some 30% of the country's population has been displaced, which has had a direct impact on the immigration rates of neighbouring countries, with rates as high as 101% year-on-year increases, as is the case in Slovakia. In the long term, this poses a huge challenge for these communities that will have to deal with the integration of many of these people, with a particular impact on labour markets. 

In this context, it has been noted once again that the weakest continue to be hit the hardest. Across Europe, the price of both energy and the consumer basket is impacting on the most modest of households. For food alone, the increase could be as high as 45% by the end of the year, pushing many people close to the poverty line. At the macroeconomic level, similar effects are expected for countries including inflation, a slowdown in international trade, currency depreciation and difficulties in meeting debt repayments.

The Ukrainian war has also highlighted an underlying problem that has existed for years – Europe's energy dependence on Russia. New policies arising from the conflict are aimed at counteracting this power and seek to ensure access to and the diversification of supply sources as early as 2023. Meanwhile, Ukraine's global importance as a major supplier of wheat and other commodities to the supply chain has put governments around the world on notice, prompting them to activate mechanisms to secure food and commodity production. Nevertheless, a difficult autumn lies ahead, with 40% of the Ukrainian harvest at risk for 2022 in addition to global fertiliser supply issues.

All these issues are a reflection of the logistical problems that exist in all sectors around the world. Following the covid-19 pandemic, demand for raw and industrial materials increased and, as a result of the war, the prices of items such as coal, steel and nickel soared because of the fact that Russia and Ukraine supply up to 50% of some of these materials. According to McKinsey, the summer slowdown is only temporary, with prices expected to continue to rise. 

These factors all play a role in what comes next: the emergence of new supply chain management techniques. Concepts such as dual sourcing, which has increased by 55% since the start of the war, are some of the ways in which supply chain reconfiguration is taking place to achieve greater future resilience. However, until a comprehensive change is achieved, industries such as technology and construction will remain under stress. This has given rise to the idea of friendshoring – the alliance of several countries with common values and interests that establish collaborative alliances to achieve a stronger position in both the buying and selling of raw materials and products.

Globalisation

Globalisation has also been affected by the war. In particular, the idea of a shared Internet, an open access information system, has been affected. Many countries are choosing to limit their citizens' access to certain services in favour of domestic platforms of their own. There has also been a battle over increasingly fragmented software and hardware standards, a trend that has only increased since the war began as distrust between different blocs of countries has grown internationally.

McKinsey's report notes that if there is one disruption for which no outcome can be predicted, it is the effect of war on financial systems. Around €75 billion of assets are at risk in Russia. Inflation, a deflationary bubble in China or credit risk from the shadow banking sector are just some of the effects to which the international financial system is exposed. The most significant, and worrying, effect would be a recession caused by inflation that could last between 12 and 18 months, a scenario for which, fortunately, most banks are prepared, since they have healthy balance sheets and will be able to maintain the pace of lending when it could be needed most. 

On this issue, Ana Botín, in an interview in her capacity as president of the European Banking Federation, said: “The European financial system is very, very strong. We can withstand what is coming, which are more difficult times than we expected. Some countries and some banks are more exposed. As I have said, in Spain, this exposure is very minimal. So, banks will be part of the solution, just as we were during COVID. We are well capitalised. We have liquidity. We have greatly improved risk management. The system is going to weather the storm well; however, having said that, we cannot be complacent because this is a very serious issue. We are facing a war and there is a lot of uncertainty.”

A war, on the other hand, has an immediate effect of increased defence spending, not only for the countries in conflict, but also for the surrounding countries and, ultimately, for the whole world due to the various alliance networks.

Moreover, war is not only fought in the trenches, with bullets and bombs. The Ukrainian conflict is also the first one that, on a massive scale, has moved into cyberspace. This leads not only to information theft, but also to a persistent global breakdown of services and communications, as well as the spread of malware and constant disinformation campaigns.

These difficult times also mean that the world's major players are forced to take sides. Of the 281 Fortune 500 companies operating in Russia before the war, 70% have left or are in the process of leaving the market. This private sector reaction came almost immediately in the first days of the invasion and has been backed at all levels, from boards of directors, shareholders and employees.

Finally, if there is one term that sums up the situation perfectly and is a trend that will continue over the coming years, it is volatility. 

Any long-term forecast is susceptible to change in the blink of an eye. This is nothing new, however, since economic stagnation has always been the norm in times of war. This war and its effects on energy and commodity prices make it impossible to anticipate the changes that may happen from one day to the next. Markets have reacted very differently to the pandemic, and companies see volatility and geopolitical risks as the main obstacles to growth.