The Long-term Impact on Estonia of the War between Russia and Ukraine

The war between Russia and Ukraine has made Ukrainians flee the war as refugees and has made access to many raw materials much more difficult. The Foresight Centre has drawn up alternative scenarios for the possible long-term impact of the inflow of refugees on the population and on employment, and consequently on the revenues and expenses of the Estonian state. The analysis also covers the immediate economic impact on businesses operating in Estonia, looking at the options for replacing production inputs imported from Russia and Belarus.

As at 25 April 2022, some five million people had left Ukraine as refugees, mostly women, children and the elderly, as men of working age were not allowed to leave the country because of the general mobilisation. Around 30,000 refugees have arrived in Estonia so far. Two possible scenarios need to be considered when estimating possible future developments, as a majority of the refugees may leave after staying for a short time in Estonia, or the war and their return home may become much more drawn out, with additional refugees arriving and many of them staying permanently in Estonia. The scenario analysis is used to address the question of how the immigration caused by the war will affect the population of Estonia, and the working age population, over the very long term out to the year 2100. It considers the costs and revenues for the Estonian state in different scenarios.

Sanctions on exports from Russia and Belarus mean that Estonian businesses will have to look elsewhere to source the raw materials and semi-finished products that they previously got from those two countries. We use foreign trade data to show the vulnerability of the Estonian economy to different raw materials, considering the availability of the replacement goods and the cost of making the change.

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