War in Ukraine:\\
Global Update
BCG Global Advantage Practice Area
Prepared: 26 May 2022

Prepared: 26 May 2022

Introduction to this document

Moreover, the continuity of the war has
resulted in profound economic impact, notonly within Ukraine but globally—as supply
chains face disruption, commodity prices
rise, and unprecedented levels of sanctions
take hold.

We continue to lean into the most pressing
issues and questions on the minds of ourclients and teams.
This edition shares the latest update on the
global economic impact as well as
implications for business leaders.

Copyright © 2022 by Boston Consulting Group. All rights reserved.

The war continues to be first andforemost a humanitarian crisis, and the
top priority for all continues to be the safety
and security of people.

2

Prepared: 26 May 2022

War in Ukraine continues to evolve along several dimensions

Broader impact
Narrower impact

Duration

Weeks

Months

Years

Days

Geographic
scope &
materiality
Sectoral scope& materiality

Decades

Central & Eastern Europe

Russia &UkraineEU
GlobalE.g., Automotive, machinery

Energy, Metals,
Agrifoods
03 Mar.

10 Mar.

17 Mar.

24 Mar.

14 Apr.

26 Apr.

12 May25 MayWholeeconomy
31 Mar.

1: Reuters and Foreign Policy 2. Al-Jazeera and Australia Home Affairs 3. Source: BCG analysis Note: BCG does not provide legal or regulatory advice

Last defenders of Mariupol
surrender. Russia gains
control of the Azov sea coast
Australia granted 6,000+
temporary humanitarian visas
to refugees. 1,700+ have arrived

Copyright © 2022 by Boston Consulting Group. All rights reserved.

Interrelated
dimensions

EU's 6th sanction package
awaits approval. Other nations
continue to take punitive
action – e.g., CA sanctions
more oligarchs, bans
import/export of luxury goods3Prepared: 26 May 2022

6.5M Ukrainians have crossed borders | Current capacity constraints inCentral Eastern Europe, future flows could add pressure on Western Europe
Movement from borderto European countries~54% entered the Schengen Area throughPoland and ~16% through Hungary<1%

Indicative view on refugees flows until May
23rd , 2022

<1%

1%

1%

All other bordering countries also facing
capacity constraints<1%

X% of all refugees

1%

1%

<1%

<1%
1%

1%

0 - 100
100 – 1,000
1,000 – 2,000
2,000 – 4,000
Over 4,000~50% settling down in Central Eastern
Europe

30%
13%

1%

6%
1%

1%
1%

2%

4%
6%

3%

2%

1%

~50% moving to other countries(including non-EU countries)

3%

2%
2%

Copyright © 2022 by Boston Consulting Group. All rights reserved.

Refugees per 100,000
inhabitants indestination country

Limited flows to rest of the world, withpotential to increase long-term intake<1%

Note: Actual number of "unique" refugees might be slightly lower as the crossing are not counted as per "unique" person, however at this point it is uncertain
whether the return is permanent or temporary. Note: Indicative view; recent analyses indicate that onward travel from directly neighboring countries (particularly
Poland, Hungary, Slovakia) and hence also inflow to not directly neighboring countries (particularly Germany, Italy, France) might be higher than stated. Note:
These analyses represent only potential scenarios based on discrete data from one point in time. They are not intended as a prediction or forecast, and the situationis changing daily.Source: UNHCR; interviews with NGOS; survey among refugees, BCG calculation & analysis

An estimated 1-1.5M refugees havereturned to Ukraine, mostly from CEE
countries; however, uncertainty remains
over permanence4Prepared: 26 May 2022

Summary snapshot | War in Ukraine global economic impact
Supply Chain Metrics

Global Growth Outlook

2021

World Bank

Leading FIs

2022

2022

ActualJan'22
Forecast

12 May – 20 May '22
Forecasts
Minimum
Median

4.7%

2.4%
4.2%
4.1%

-10.1%
2.7%
3.3%

RussiaEuro Zone 5.3%
Global3.9%-15.0%
1.8%
2.0%

Commodity Prices4
Commodity price (actual, $)Commodity

Jan 3 '22

May 23'22

ChangeCrude Oil ($/bbl)

79.0

110.0

+39%

Gas ($/MWh)

80.4

87.9

+9%

Coal ($/t)

157.5

392.9

+149%

Wheat (€/bu)

274.0

414.0

+51%

Rapeseed (€/t)

728.5

830.0

+14%

Nickel ($/t)

20,430.0

28,215.0+38%

Palladium ($/oz)

1,826.0

1,939.7+6%

Deep Sea Cargo Bosporus
Straits Transits (Avg. #/day)2
Pre-War Prev. Wk Curr. Wk(5/165/22)(Nov '21) (5/9-5/15)

NorthboundSouthbound

8.9
9.6

6.1
5.9

Deep Sea Cargo Port Calls(Avg. #/day)2

ΔCWPreWar

4.9
5.6

-45%
-42%

Pre-War Prev. Wk Curr. Wk(5/165/22)

ΔCWPreWar

4.5
21.6

-100% BDI3 2780
-6%

(Nov '21) (5/9-5/15)

UkraineRussiaBaltic Dry Index(Daily Avg)3

0.0
20.3

0.0
20.4

Pre-War Prev. Wk Curr. Wk(5/10(5/175/16)
5/23)(Nov '21)

3059

3257

ΔCWPreWar

17%

Sanctions & Policy Actions
Cumulative # WW Sanctions in-place5 (∆ since previous)
Updates since 11 May
(+35)
(+12)
• UK sanctions Putin's close family and friends• UK prohibits Russian airlines from selling UK airports landing slots(+7)
614• CA sanctions more oligarchs, bans import/export of luxury goods
3,195
3,023
4,801
435
• NZ sanctions 27 Belarusian leaders including Pres Lukashenko• RU cuts gas supply to Finland, prohibits business with 31 companies Individuals
Companies Other entities

Copyright © 2022 by Boston Consulting Group. All rights reserved.

GDP Forecasts1

Corporate Actions in Russia Market
Based on sample of +850 companies6
(+1)
(+12)

390

89
Exit

Suspend operations

(~)

(~)

(+1)

(-3)

83

21

106

164

Halt Shippment /Supply

Curtail Access to Capital

Suspend New
Investment / Partnership

Remain in Russia withsignificant exposure

1. GDP forecasts from World Bank and FIs per Bloomberg database (13-60 FIs per forecast period) 2. Deep Sea Cargo: oil tankers MR & up, bulkcarriers Panamax & up, containerships 3,000+ TEU, VLGCs, LNG carriers 60,000+ cbm & PCTCs 6,000+ ceu. Clarksons Research(https://www.clarksons.com/) Clarkson Research Services Limited (“Clarksons Research”). © Clarksons Research 2021. All rights in and to Clarksons Research services, information and data (“Information”) are reserved to and owned by Clarksons Research. Clarksons Research, its groupcompanies and licensors accept no liability for any errors or omissions in any Information or for any loss or damage howsoever arising. No party may rely on any Information contained in this communication. Please also see the disclaimer at https://www.clarksons.net/Portal/disclaimer,
which also applies. No further distribution of any Information is permitted without Clarksons Research’s prior written consent. Clarksons Research does not promote, sponsor or endorse the content of this communication. 3. https://www.bloomberg.com/quote/BDIY:IND; Baltic Dry
Index (BDI) is index of avg price paid for transport of dry bulk mat'ls across 20+ routes 4. S&P Capital IQ 5. Total sanctioned actions, incl. duplication. Source: corrective.org 6. Yale Chief Exec Leadership Inst.. Numbers in parenthesis () indicates increase /decrease since last update. Where
there is a decrease this is because reclassification due to definitions, and company action recategorization from one to another. Note: BCG does not provide legal or regulatory advice

5Prepared: 26 May 2022

Leading Financial Institutions predicting major decline in Russia GDP
vs. World Bank Jan forecast
GDP Growth (%), Selected Regions, 2021A – 2023F
Russia6Eurozone

Global

5.3

4.7

4.2

4

2.7

2.4

2

3.9

4.1

-1.5

3.3

2.0

2.0

2.3

1.8

0

3.3

0.0

-2

-6
-8

Recent median
GDP growth
projections
remain around-10%

Copyright © 2022 by Boston Consulting Group. All rights reserved.

-4

-10.1

-10
-12

--11.8-14-16--15.0
Actual2021

Jan

20 May2022F

20 May2023F

Note: 12 May - 20 May forecast of 13 FIs for Russia, 60 FIs for Eurozone, 34 FIs for Global
Sources: World Bank; Bloomberg; BCG Analysis

Actual2021

Jan

20 May2022F2021 Actual

20 MayActual

2023F

2021

World Bank (Jan 2022)Jan

20 May2022F

20 May2023F

Median/Min, Leading FIs (May 2022)

6

Prepared: 26 May 2022 – Confidential: Limited Distribution

Evolution of key commodity prices, wheat prices at new high
Crude oil (Brent, $/bbl.)
Max '22100

Hydrocarbons

Jan 3rd '2250

Conflict
128
110
79

300

Natural gas – (TTF, €/MWH)

Conflict

1,000

21-01-01

20-01-01

Rapeseed (MATIF, €/Ton)

891
830
728

Jan 3rd '22

500

21-01-01

20-01-01

Wheat (MATIF, €/bu.)

Conflict

Max '22

750

Food

0
19-01-01

22-01-01

500

20-01-01

21-01-01

Palladium(NYMEX, $/troy oz.)

20-01-01

21-01-01

22-01-01

Conflict
414
274

Jan 3rd '22

Conflict

Source: S&P Capital IQ,23 May 22; BCG Analysis

21-01-01

50,00021-01-01

20-01-01

Nickel (LME, $/Ton)22-01-01

Conflict
46,528Max '22
2,980
1,934
1,826

Jan 3rd '22
20-01-01

0
19-01-01

22-01-01

2,500

0
19-01-01

0
19-01-01

India bans
wheat export

Max '22

Metals158

Jan 3rd '22

22-01-01

250

5,000

440
393

Max '2288
80

Max '22250019-01-01

Conflict250
100
Jan 3rd '22

019-01-01

Coal (Newcastle, $/Ton)

227

Max '22200500

22-01-01

25,000019-01-01

28,21520,430Jan 3rd '22

20-01-01

21-01-01

Copyright © 2022 by Boston Consulting Group. All rights reserved.

150

22-01-017

Prepared: 26 May 2022

Key sanctions and policy actions currently in place
Current sanction actions by country and target• Coordinated policy/sanctions programs
Limiting SWIFT access, removing "MFN" status, sanctioning gold1
Enforcing sanctions and export controls via global task force
Expelling diplomats, closing embassies/consulates, sanctioning govt officials
Limiting or banning energy/coal, key parts, alcohol, luxury goods, steel, etc.
Closing EU border crossings and ports• US & UK ban professional services exports, some media outlets• UK sanctions Putin's close family and friends• UK prohibits Russian airlines from selling UK airports landing slots• CA sanctions more oligarchs, bans import/export of luxury goods• NZ sanctions 27 Belarusian leaders including President Lukashenko
•
•
•
•
•
•

Sanction actions5 in-place
1138
963
748

0

Bans "unfriendly" officials, Facebook and Instagram
Seeks new buyers for oil and gas, demands payment in rubles rather than USD
Seizes assets and luxury items, declares bankruptcy moratorium
Breaks trademark compliance rules on imports
Cuts gas supplies to Poland & Bulgaria
Cuts gas supply to Finland, prohibits business with 31 companies

Sanction targets5 / ∆ since last update• China to maintain normal economic and trade relations with RU• China (& RU) voted against order to halt the invasion at ICJ2 in The Hague• China & India abstained at 25 Feb UN Security Council vote against invasion• Indonesia in difficult position, as 2022 G20 host

1. Intended to prevent selling gold reserves to finance war; 2. International Court of Justice.
reports; BCG analysis. Note: BCG does not provide legal or regulatory advice.

Copyright © 2022 by Boston Consulting Group. All rights reserved.

Large EMs

Russia"Western" Allies

Current sanctions & policy actions (Key examples)

+ 35

+7

+ 12

4,801

435

614

Individuals

Companies

Other entities

New
Source: Government websites; Media

5. Total sanction actions, includes duplication.
Source: www.correctiv.org

8Prepared: 26 May 2022

Recent developments beyond imposed sanctions

RussiaUS Secretary of State Blinken accused Russia
of using food as a weapon by holding global
supplies "hostage"1

Russian Ministry of Foreign Affairs has proposed
Parliament to discuss the potential
withdrawal of Russia from WTO and WHO7

The G-7 financial leaders agreed to provide$18.4B aid package to help Ukraine make intl'
payments2

Russia condemns the West for triggering a
global food crisis by imposing severest
sanctions in modern history on Russia8

EU developing proposals to confiscate frozen
Russian assets to pay for the reconstructionof Ukraine3

Russia president Putin sacks eight generals
in anger at slow progress in Ukraine invasion9

EU announced an action plan to speed up
the transition to renewable energy andreduce dependence on Russian gas and coal4

After a long siege, Russia takes control ofremaining areas of Mariupol; continues slow
advance in the east of Ukraine10

Large emerging markets

India, second-largest global wheat producer,
banned wheat exports as heat waves havedamaged crops and the Ukraine conflictexacerbated global food shortages11
India is in talks with Russia over a deal tobuy oil at discounted rates12
China is ramping up purchases of oil from
Russia at low prices, filling the vacuum left byWestern buyers13

US re-opens embassy in Kyiv5
President Biden: US to respond ''militarily' topotential China military actions6
1, 2, 3. Reuters; 4. CNN; 5. CNN; 5. Reuters; 7. politico 8. Reuters; 9. metro; 10. Reuters; 11. CNN; 12, 13. Reuters.
Note: BCG does not provide legal or regulatory advice

9

Copyright © 2022 by Boston Consulting Group. All rights reserved.

"Western" Allies

Prepared: 26 May 2022

Overview of corporate actions
Company Announcements re: Russia Market per Yale School of Management tracking (24 May 2022)
Energy

252

50

57

8%

52%

16%
26%
2%

8%
12%
21%
Complete orpartial actions4

30%

26%

9%
37%
2%

Healthcare

Industrial
Goods2Tech, Media,
Telecomm

Professional
Services

Others3

47

226

148

50

23

8%

11%

19%
9%

51%
30%

49%

43%

12%
9%
20%

18%
1%
9%
13%

Exit

Halt Shipments/ Supply

Suspend new investments/partnerships

Suspend Operations

Curtail access to capital

Remain in Russia with significant exposure

22%

39%
40%

33%
9%
11%

34%

6%
2%
8%
10%

0%

Copyright © 2022 by Boston Consulting Group. All rights reserved.

#
Companies

Consumer

Financial
Institutions1

0%

22%
17%

1. Incl. Banks, Insurance & Investment companies; 2. Incl. IG, Infrastructure, Manufacturing; 3. Inc. Private Equity & Principal Investors, Insurance, Public Sector, and others. 4. Definitions: Exit
(Includes Complete / Partial: Cease operations, divestment, discontinue, leave and withdraw business from Russia). Suspend Operations (Includes Complete / Partial: Suspension: Activities, JV, salepoints, manufacture in Russia). Halt Shipments/Supply (Temporarily stop / freeze sales and transportation of goods/ services in, to and from Russia). Curtail access to capital (Financial Institutions(FI)restrict, reduce, cut, suspend, Russian access to capital provided by FIs). Suspend New Investments or Partnerships (Stop any new investments in Russia and suspend current sponsorships for Russian
Athletes). Source: Yale School of Management; Press search; BCG analysis.

10

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