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Europe is currently watching Russia’s military buildup under dictator Vladimir Putin, trying to combat a threat that would have been hardly plausible just a few years ago: war with Russia.
As Bloomberg writes , Russia is churning out artillery shells, drones and missiles at a rate that will soon exceed the needs of its troops in Ukraine.
The publication named one of the reasons why a war between Russia and NATO will not start now. "A war on NATO territory remains unlikely – not least because Russia does not yet have the capabilities and probably will not want a war on two fronts," the journalists argue.
In turn, NATO Secretary General Mark Rutte suggested that Russia could attack a member of the alliance within 5 years, which echoes the predictions of German Chancellor Friedrich Merz and several European intelligence agencies. At the same time, as the publication noted, Denmark has an even more terrifying forecast. They believe that Putin could enter into a local war with a neighboring country within 6 months and pose a real threat to one or several NATO countries within 2 years. "The three Baltic states make up a small part of the European economy, but strategically they are crucial… They occupy a special place in Putin’s distorted historical imagination," the publication notes.
Bloomberg estimates that a war, if it breaks out, could reduce global output by 1.3%, or $1.5 trillion, in the first year, nearly the same as a full-scale invasion of Ukraine. The losses would be much greater if the war spread to other European countries. The publication noted that the Baltic states alone will suffer a 43 percent hit to their economies in the first year of the war, which is comparable to the decline in production in the Russian-occupied territories of Ukraine.
Other European countries that go to war, including Finland, Sweden, Poland, and Germany, will take a smaller but still significant hit. For the EU as a whole, higher defense spending somewhat softens the blow from higher energy prices, market turmoil, and infrastructure destruction, but GDP will still contract by 1.2% and debt will be put on a steeper upward trajectory.
Russia’s economy will suffer a 1% loss as existing sanctions have isolated it from external pressure.
The UK will see only a 0.2% hit to GDP. Market turmoil will reduce US GDP by around 0.7%, while tighter financial conditions and higher energy prices will reduce China’s GDP by around 0.8%.
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