An analysis of the impact of external shocks on the economic performance index of the European Union countries: The case of the Russian invasion of Ukraine

Abstract

This study will use secondary data to assess the economic performance of European Union (EU) countries over the last two decades, from 2000 to 2022. The Economic Performance Index (EPI) is produced using numerous critical factors, including unemployment, inflation, public debt, and economic growth. This study will first examine the influence of COVID-19 on the performance of these countries before going on to examine the impact of Russia’s invasion of Ukraine. The war has had a direct impact on the world economy, notably in Asian countries (Umoru et al., 2023). Furthermore, the pandemic has harmed all economic sectors in EU countries (Su et al., 2022). The use of graphs and the interpretation of descriptive statistics will be used to investigate the influence of the aforementioned exogenous shocks. Furthermore, panel data regression analysis between EPI and average earnings in the public and private sectors will be used to examine whether economic performance transfers into the real economy. The findings appear to indicate that both external shocks have had a negative impact on the economic performance of all 27 EU member countries, but in the case of COVID-19, economies reliant on tourism have suffered the most, while the Russian invasion of Ukraine has put more pressure on Hungary, the Czech Republic, and the Republic of Ireland. This research will add to the growing body of post-Russian invasion literature.