Russia-Ukraine War Economic Impact – Analysis & Special Reports
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1. Luxembourg: USD 143,203 per capita in 2025
We forecast Luxembourg to be the world’s wealthiest economy in 2025 in nominal GDP terms (at market exchange rates). Luxembourg’s economic success in recent decades is thanks to a booming services sector: The country is home to several important EU institutions and boasts a large financial sector thanks to a favorable tax regime. While the economy likely contracted last year due to Covid-19, it should return to a strong growth trajectory in the coming years and is set to expand well above the EU average, amid the continued dynamism of the services sector and strong population growth.
“Luxembourg is one of the world’s largest financial centres, due to renowned high skilled labour from the ‘Grande Region’ and infamous tax regulation. It is a worldwide leader in the investment fund industry with assets under management of over EUR4.1trn. It is also the largest international private banking centre and the largest captive reinsurance centre in Europe. There are approximately 3,900 funds registered in Luxembourg. As of 2018, the number of banks in Luxembourg was 133, of which 40 are branches of foreign banks. Collectively, the banks hold assets of approximately EUR760bn.” – Katharina Koenz, economist at Oxford Economics
2. Ireland: USD 112,769 per capita in 2025
In recent decades, Ireland has gone from being one of the poorest EU nations to one of the wealthiest, thanks to an export-oriented economic model and huge success in attracting FDI—particularly from large multinationals. Ireland benefits from a favorable tax regime, a skilled, English-speaking workforce, a stable business environment and close ties to the U.S. Over our forecast horizon, Ireland is set to continue growing at a healthy clip, bolstered by strong inward migration and investment. However, extra trade frictions with the UK due to Brexit, and a potential reduction in the country’s tax competitiveness pose risks. Moreover, interpreting national accounts data is made difficult by the large presence of multinationals in the country.
“Calculating Ireland’s economic growth is complicated by the distortionary effects of balance-sheet movements of foreign multinational companies headquartered in Ireland. These distortions mean that Ireland’s official GDP figures are an unreliable measure of domestic activity, while also being volatile and subject to frequent and substantial revisions. This is particularly acute in the external sector, where official export growth figures have increased during the pandemic, owing to large corporations’ balance-sheet movements. The pharmachemical and technology firms that dominate Ireland’s multinational sector have thus far fared relatively well. This improved export performance, as well as increased government spending and a double-digit decline in imports, is estimated to have more than counterbalanced sharp declines in real private consumption and overall fixed investment.” – Economist Intelligence Unit
3. Switzerland: USD 96,788 per capita in 2025
Switzerland’s economy is supported by an extremely robust institutional framework, a stable and conducive business environment, and an extremely high-performing education system. The country also boasts a strong industrial base and a convenient location at the heart of Europe’s largest national markets. Switzerland weathered the Covid-19 crisis fairly well, thanks to generous state support and generally laxer restrictions than other nations. Looking forward, the economy is seen returning to a solid—if unspectacular—growth trajectory, although disagreements with the EU over the bilateral relationship and exposure to external shocks pose risks.
“Compared to the situation at the end of 2019, the level of activity in Switzerland at the end of the third quarter was well above that of its European neighbours […]. For 2020 as a whole, we forecast a contraction of 3.2% of GDP. The recovery in 2021 should be solid, mainly in the second half of the year once the Covid vaccine eliminates any risk of a third wave of the pandemic. We expect growth of 3.1% for the year 2021 as a whole.” – Charlotte de Montpellier, economist at ING
4. Norway: USD 95,165 per capita
The discovery of oil and gas in the North Sea in the 1960s transformed Norway’s economy, with the government subsequently building the world’s largest sovereign wealth fund—today valued at over USD 1 trillion—on the back of this natural resource wealth. Today, energy is still a key component of the economy, although the services sector is by far the largest economic sector at over 60% of GDP. Norway was less affected by Covid-19 than other European economies, and is set to return to growth from 2021 onwards thanks to higher oil prices and rebounding domestic demand.
“We expect the domestic Norwegian economy to be in position for a strong rebound […]. Household incomes have kept up well during the pandemic, in large part thanks to generous unemployment support from the government. Consumer spending fell last year as households cut back on travel and services. But consumer confidence is good, consumption of goods remains strong, and the housing market is booming. We therefore believe that underlying consumer demand is strong and will contribute significantly to the economic recovery once restrictions are lifted. Businesses are also benefitting from generous government support, which has prevented any rise in bankruptcies. Moreover, temporary tax changes for the oil industry have spurred companies’ investment plans and prevented a bigger decline in activity in the sector.” – Analysts at Swedbank
5. Denmark: USD 78,068 per capita
The economy’s high standard of living can be traced to effective governance, elevated human capital and a conducive business environment. Denmark has a developed services sector, is a net exporter of food and boasts a burgeoning renewable energy industry as part of the government’s goal to go carbon neutral by 2050. Despite taking a knock in 2020 from the coronavirus pandemic, the economy should resume a robust growth trajectory over our forecast horizon, buttressed by favorable demographics and healthy consumption and investment. That said, elevated household debt is a risk.
“We have recently revised our population forecasts, taking into consideration stronger inflows of migrants and labour force reforms that will see the pension age increase from 65 to 67 by 2022. This has helped raise the potential of the Danish economy, and the new government’s plan to be more welcoming of skilled immigration should help further. A rising participation rate, particularly among older workers, is the main factor behind the increased contribution of equilibrium employment to potential output growth. This should facilitate higher potential growth.” – Rory Fennessy, economist at Oxford Economics
6. United States: USD 77,653 per capita
A leading position in many cutting-edge technological fields, deep capital markets, a flexible labor market and strong rule of law are all factors which make the United States one of the richest countries in the world in GDP per capita terms. These same factors should continue to support the economy over the next several years and ensure the U.S. remains among the world’s wealthiest nations, while vast fiscal stimulus should provide a further boost. However, a bitterly divided political panorama, elevated debt levels, sharp socioeconomic inequalities and China tensions all cloud the outlook.
“The diversity, dynamism, and competitiveness of the U.S. economy, along with the U.S. dollar’s status as the preeminent international reserve currency and very large size and depth of the U.S. Treasury market, will continue to offset rising fiscal pressures. However, the U.S.’ fiscal strength is deteriorating and that deterioration is expected to accelerate over time as higher ageing-related entitlement spending, debt service payments and relatively weaker government revenues drive persistent fiscal deficits. Diminishing confidence that U.S. policymakers will take effective action in the coming years to reduce federal government budget deficits and the ongoing rise of the debt burden would signal erosion of both fiscal and institutional strength.” – Analysts at Moody’s
7. Singapore: USD 75,250 per capita
Upon expulsion from Malaysia in 1965, the nascent independent republic of Singapore was a tiny third-world country, with no natural resources and simmering ethnic tensions. Fast forward half a century, and Singapore is now among the world’s richest nations in per capita terms, thanks to decades of export-oriented growth which saw heavy investments in physical and human capital and the creation of a world-class business environment. While Singapore was relatively hard-hit in 2020 by Covid-19 due to the economy’s open nature, economic activity should recover swiftly from 2021 onwards, with growth expected to be notably faster than most other developed economies over our forecast horizon, aided by the government’s focus on long-term policymaking. However, further deglobalization and a rapid slowdown in labor force growth pose risks to the outlook.
“The [2021] Budget will aim to build three enablers, (1) promoting innovation and collaboration on a global scale, (2) providing capital to businesses, and (3) developing workers’ skills, talents and creativity. More clarity on Singapore Green Plan 2030 is seen as well […] The Covid-19 pandemic has prompted significant global shifts on the economic and social fronts, accelerated technological advances and created new global domains for competition and cooperation. Budget 2021, titled “Emerging Stronger Together”, will serve to allow the government to be a key enabler supporting Singapore’s recovery from the Covid-19 pandemic, as well as to invest in economic transformation and position Singapore for success in the long-term.” – Barnabas Gan, economist at United Overseas Bank