The increase in military spending due to the war in Ukraine has a stimulating effect on the GDP of partner countries.
Military aid from partner countries to Ukraine affects the growth of their economies. Specifically, every dollar spent on aid to Ukraine will generate an additional 65-87 cents in the coming years. This is stated in the inflation report of the National Bank.
“According to the preliminary results of the study, the fiscal multipliers for countries that provided military aid to Ukraine in 2022 are statistically and economically significant,” the document said.
It indicates that an increase in military spending in donor countries of $1 is associated with an increase in the real GDP of these countries of $0.65. for the same year, 0.87 dollars. – in a year and 0.79 dollars. – for two years. In general, the positive effect does not disappear even five years later.
In addition, there are several additional positive effects for donor countries, such as the opportunity to share military experience, better allocation of defense industry resources, a boost for arms exporters, and increased productivity because with further investment in research and development.
“Thus, the economic cost of military aid to Ukraine for partners is significantly lower than the declared nominal values,” notes the NBU.
Recall that on July 25, the United States provided another $400 million military aid package to Ukraine, which included ammunition for the Patriot, NASAMS, and HIMARS systems.
Source: korrespondent
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