From Short-Term Risk to Long-Term Strategic Challenges: Reviewing the Consequences of Geopolitics and COVID-19 on Economic Performance

Abstract

The COVID-19 crisis and the war between Russia and Ukraine affects the world economy badly. The western countries’ economic sanctions on Russia and the Russian government’s reverse sanctions on western countries create pressure on the world economy. This study was conducted to investigate how the economic performance is responding to COVID-19 and the geopolitical crisis of the era. In doing so, both theoretical and numerical data reviews have been performed. The objective of the study is to investigate the short-term risks and long-term strategic challenges of the crisis. The study used a bibliometric approach with the help of RStudio software. The Web of Science database was used for extracting the resources in line with the grey literature from the Google Search engine. A total of 895 documents were utilized in this bibliometric analysis. At the same time, secondary panel data extracted from the international monetary fund (IMF) for a period of 4 years (2019–2022) were utilized for reviewing numerical implications. The purposive sampling technique is used for data selection and main economic variables. The findings of the study imply that countries over the world registered less economic growth, high inflation rate, and high government debt in 2022 compared to the fiscal period of 2019–2021. The emerging economies and developing countries of Europe were badly affected by the crisis as the level of inflation rate hit 27 percent and the economic growth of the region registered a negative 2.9 percent. The study also found rising interest rates, exchange rate volatility, risk of stagflation, and rising energy prices are the short-term risks to economies. The issue of sustainable development goals and green aspects, risk of hyperinflation, and risk of economic recession are the long-term strategic challenges or risks to economies. Bailout and debt relief were found to be necessary for those countries badly affected by the crisis. Policymakers should facilitate financial policies and should switch from general assistance to targeted support of viable enterprises.