The Russian-Ukrainian conflict began with Russia's special military operation on February 24, 2022, and it turned over three years ago, it was thought to be a local friction, resulting in the global economy's big plate. Think of the smoke rolling on the battlefield, the ruins of eastern Ukrainian cities, the Russian military advance slowly, but the economic battlefield is more of a sewing battle. The Western countries lead Russia's sanctions, cut off energy pipelines, freeze assets, high-tech embargo, the result?
The data show that by September 2025, this war has caused the world's GDP to lose trillions of dollars, food and energy prices are rising like a rocket. Poor countries are poorer, rich countries are making money, and the logic here is simple: sanctions disrupt the supply chain, who relies on Russian energy is first miserable, who can buy cheap goods is cheaper.
Let's first talk about how the three-year war has disturbed the global economy. In the first few months of 2022, Ukraine's Black Sea ports were closed, global wheat exports fell by 30%, and food prices doubled directly. Russian natural gas accounts for 40% of EU imports. Once the supply is cut off, heating in Europe in winter will become a problem. The International Monetary Fund estimates that the global growth rate in 2022 will decrease by 0.7 percentage points because of this. By 2025, the situation has not improved much. The United Nations reports that the number of people living in poverty in countries surrounding the conflict zone has increased by 15 million. Why? Because the basic things such as energy and food are expensive, the poor can't bear it first.
Developed countries can still subsidize, but developing countries have to tighten their belts. On the surface, Russia's military spending has soared to 6% of GDP, but it relies on selling oil and gas to support Asia. The West tried to strangle its neck through sanctions. As a result, Russia's economy exceeded expectations and GDP increased by 3.6% in 2024. This is not luck, it is a calculated turn. India and China have become the biggest buyers, while the European Union and Japan are spinning in circles. Ukraine has the worst situation, with one-third of its territory occupied and its economy directly paralyzed. On the other hand, the core of this economic war is resource redistribution. Whoever controls energy wins half.
Now talking about the three impoverished countries, first speaking of the EU. The EU is not a single country, but the 27 countries have taken action to help Ukraine, spending hundreds of billions of euros. EU Commission data show that by February 2025, 16 rounds of sanctions package broke out, freezing Russia’s €300 billion assets, and prohibiting oil imports. But counterfeiting itself is harsher. Germany as the head of the European economy train, representing 55% of the total imports of natural gas from Russia before 2022, now transferred to US liquefied gas, costing 50% per cubic.
As a result, German industrial output dropped by 5 percent in 2023, the chemical giant BASF closed several factories, the unemployment rate rose to 6 percent. France and Italy, as well, electricity prices rose by 30 percent, and small and medium-sized enterprises collapsed. Overall, the inflation rate in the EU in 2024 was around 5 percent and twice as high as before the war. Why is it so painful? Because sanctions didn’t really kill the Russian economy, Russian oil and gas exports earned $300 billion in 2024 and just exchanged buyers. The EU wanted to isolate Russia, resulting in its own energy bills more than 200 billion euros.
The common people complained, and the French yellow vest movement made a comeback. EU leader von der Leyen admitted in February 2025 that sanctions will hurt the enemy 1,000 in the short term, but they can force Russian concessions in the long run. But the reality is that by September, the EU was still discussing the 19th round of sanctions, and the energy crisis had not bottomed out. Is this account of the EU a strategic investment or a loss-making business? At least for now, Europe's economic growth rate is expected to be only 1.2% in 2025, far lower than that of the United States.
The situation is similar in Japan. As a resource poor country, Japan relies heavily on Russia for energy. Before 2022, Japan imports 9% of the total liquefied natural gas from Russia and 5%. After the war, prices have risen, and Japan's energy import costs will increase by US$20 billion in 2023. Tokyo Electric Power Company's bill has doubled, and residents dare not turn on their air conditioners fully in winter. The manufacturing industry has suffered even more. Japanese auto giants like Toyota and Honda have cut their supply chains from Ukraine's steel and Russia's nickel mines, and production in 2024 will drop by 7%. Japan's Ministry of Economy, Trade and Industry reported that post-war inflation rose to 4%, the yen depreciated to 150 to the dollar, and everything imported was expensive.
Why is Japan so passive? Because it is geographically far away, it cannot detour directly from Russia, but it has to side with the United States and join the G7 sanctions. As a result, Japan's GDP growth in the first half of 2025 was only 0.5%, and the unemployment rate rose slightly. The yen easing policy left by Abenomics is already crumbling, which makes it even worse. Japanese companies began to stock up, and Tokyo warehouses were full of spare parts, but the cost was high and the competitiveness fell behind. In other words, Japan originally wanted to promote green transformation and restart nuclear power in recent years. As a result, energy shortage forced it to burn more coal, and carbon emissions increased instead. The lesson of the European Union and Japan is that sanctions are a double-edged sword, hurting Russia in the short term and hurting its own supply chain in the long run.
Of course, Ukraine is the worst one, suffering directly from the war. The World Bank reported in June 2025 that Ukraine's GDP will shrink by 29% in 2022, and infrastructure damage will exceed US $150 billion. Agriculture accounts for 10% of Ukraine's GDP. After the Black Sea blockade, corn and wheat exports have been halved, and farmers' income will drop by 40% in 2023. The poverty rate jumped from 5% before the war to 25%, and 7 million people were displaced. The Kiev government relies on Western aid to survive. By September 2025, the European Union and the United States had given a total of 200 billion euros, but most of the money was spent on arms and reconstruction was slow.
Ukraine's economy barely rebounded by 5% in 2024, but fell by another 1.2% in the first half of 2025 as the frontline advanced and the Donbas mining area suspended production. Data from the central bank of Ukraine show that the inflation rate is stable at 20% and the black market exchange rate is chaotic. Why is it so hard to recover? Because the war has not stopped, investors dare not come. Although the port is partially opened, the insurance premium is ridiculously expensive. The Zelensky government promotes digital reform, and taxation can be done with one click, but the foundation is unstable. In the past three years, Ukraine has lost 20% of its territory and its economy has regressed by ten years. In the global food crisis, Ukraine was originally a granary, but now it has become a victim. Think of those refugees, crowded in Polish border camps and living on relief. This is not just a number, but a living account of lives.
Among the three countries that turned to get rich, Russia was the first. Although it was sanctioned, it didn't get down. The Central Bank of Russia reported in August 2025 that GDP will increase by 4.3% in 2024, with the military industry driving more than half. Why? Energy exports shift to Asia. After the EU embargo, Russian pipeline valves were closed, and oil and gas sales to China and India doubled. In 2024, Russia sold 38 billion cubic meters of natural gas to China, earning 50 billion US dollars. Although the ruble has depreciated, foreign exchange reserves have stabilized at 600 billion yuan. The Putin government has promoted export substitution, and the production of domestically produced chips and drones has increased.
The projected growth in 2025 is 0.9%, but the oil price has fallen to US $70 per barrel, and the pressure is coming. The United States pushed tariffs to plug the leak, but Russia bypassed Turkey and Central Asia. Russia's economy is called "war economy". Military expenditure accounts for 30% of the budget. People's livelihood is squeezed, but the surface is glamorous. The rich transferred their assets to Dubai, and the wages of ordinary people rose by 15%, but prices also kept up. In the past three years, Russia has proved the resilience of a resource-rich country, but in the long run, the technological blockade will bite people.
India is the biggest fisherman, remaining neutral and getting a big bargain. Starting from 2022, India's oil imports from Russia will soar from 50,000 barrels per day to 1 million barrels per day, with a total value exceeding US $50 billion in 2024. Why is it cheap? Western sanctions lowered the price, and Indian refineries bought it at a fixed price and sold it to Europe at a high price, earning a difference of US $5 billion. According to data from the Indian Ministry of Foreign Affairs, in the first half of 2025, the trade surplus with Russia was US $20 billion.
The Modi government promoted "self-reliance", assembled Su-30 fighter jets with Russian parts, and bought S400 air defense systems. In terms of energy security, India has got rid of its dependence on the Middle East and has full oil reserves. In September 2025, the United States threatened to increase tariffs, but India did not panic, and its foreign exchange reserves exceeded 700 billion. India's economic growth rate is expected to be 7% in 2025, and the stock market is bull market. The common people have benefited, diesel prices have stabilized, and their hands are not freezing in winter like in Europe. But India also has a headache. The rupee has depreciated and imported electronic products have become expensive. India's move is called "strategic autonomy". It doesn't take sides but gets it all.
China finally said, of course, it is also among the rich. China is not involved in the military, but it is economically profitable. After 2022, Western companies will withdraw from Russia and China companies will flock in. By 2025, more than 9000 Chinese companies will operate in Russia, accounting for half of foreign investment. Huawei and ZTE have filled the gap in 5G, and construction teams have built thousands of kilometers of roads. Trade volume will exceed US$240 billion in 2024. China buys 40% of Russia's oil and natural gas, and the price is 20% lower than the market. According to customs data, in July 2025, China imported fossil fuels from Russia accounted for 42% of its total exports.
The contrast between these three rich countries and three poor countries exposes the polarization of the global economy. On the poor side, the European Union and Japan are developed countries, but they have stumbled due to energy dependence, proving that sanctions are not a panacea. Ukraine was an innocent victim and relied on aid to die, but reconstruction is far away. On the rich side, Russia relies on resources to support it, India and China play neutrality, and energy trade becomes a gold mine. Globally, the food crisis in developing countries has intensified, and poverty rates in Africa and the Middle East have increased by 10%. The World Trade Organization says global trade growth will be only 2.5% in 2025, far lower than before the war. Why is this? Because geopolitics reshapes supply chains, the United States promotes "friendly coastal outsourcing" and Europe engages in "re-industrialization", but the costs are high. China and India have become new hubs.