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The Economic Impact from the Russia/Ukraine Crisis

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Cal State Fullerton’s Anil Puri and Mira Farka, co-directors of the Woods Center for Economic Analysis and Forecasting at the university’s College of Business and Economics say the implications of the Russia/Ukraine conflict will be felt by the economies here in the U.S. as well as Europe.

“Russia’s economy makes up only 3% of the world’s economy; Ukraine’s is less than 0.3%. Yet, Russia accounts for 42% of Europe’s gas imports and 26% of its oil imports. It only makes up less than 5% of oil and petroleum imports for the US. The EU is Russia’s largest trading partner accounting for 37% of its total world trade. Russia is the fifth-largest trading partner for the EU, accounting for 5% of its total trade. In contrast, Russia is the US’ 30th largest trading partner, with a total trade of roughly $30 billion, a minuscule amount of its overall trade flows.”

The two economists weighed in on the impact of the ongoing crisis that has already led to several Russian sanctions and the removal of select Russian banks by SWIFT.

Impact of Sanctions:

“The sanctions implemented over the past few days will have a crippling effect on the Russian economy, especially the disconnect from SWIFT and the potential freezing of the Russian Central Bank’s $630 billion in foreign exchange reserves. The impact of SWIFT, though garnering more attention, is more incremental and less immediate. However, the pain from the second main sanction will be more severe.”

Impact on the US Economy:

“The US is relatively insulated from this shock, though less than one would hope. The immediate and medium-term impact result is not just an upward march in inflation (via higher energy and food prices), it is also slower growth via jittery stock markets, a European slowdown, and a difficult balancing act by the Fed in combating inflation without pushing the economy into the depths of a new recession. Such balancing acts rarely end up being perfectly well executed.”

In their Economic Forecast for 2022, Puri and Farka quoted the critically acclaimed movie, Forrest Gump, “Life is like a box of chocolates. You never know what you’re gonna get.”  The CSUF economists forecast for 2022, presented in fall 2021, reinforced the notion that this is an evolving situation destined to surprise many.

Please click here for the 2022 forecast.

About Cal State Fullerton: The largest university in the CSU and the only campus in Orange County, Cal State Fullerton offers 110 degree programs, and Division 1 athletics. Recognized as a national model for supporting student success, CSUF excels with innovative, high-impact educational practices, including faculty-student collaborative research, study abroad and competitive internships. Our vibrant and diverse campus is a primary driver of workforce and economic development in the region. CSUF is a top public university known for its success in supporting first-generation and underrepresented students, and preparing all students to become leaders in the global marketplace. Our It Takes a Titan campaign, a five-year $250 million comprehensive fundraising initiative, prioritizes investments in academic innovation, student empowerment, campus transformation and community enrichment. Visit

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