The Impact of War on Markets: An Economic and Financial Analysis

Abstract

Geopolitical events, particularly wars, significantly disrupt global economies, as seen in the Russia-Ukraine conflict's impact on energy prices, supply chains, and stability. This study analyzes the economic and financial effects of World War II, the Vietnam War, the Gulf War, and the Russia-Ukraine War. It compares immediate and long-term impacts on key economic indicators like stock market indices, commodity prices, GDP growth, inflation, and employment. Using a robust methodological approach, including descriptive, statistical, and comparative analyses, along with case studies, data were collected from sources like the World Bank, IMF, and financial market databases. Findings highlight the variability of war impacts: World War II saw high GDP growth and stock market increases despite inflation; the Vietnam War had moderate GDP growth but a notable stock market decline; the Gulf War caused economic contraction with negative GDP growth yet a swift stock market recovery; and the ongoing Russia-Ukraine War has led to a projected global GDP decline and significant stock market volatility. This study underscores the need for flexible and adaptive economic strategies tailored to each conflict's unique circumstances, providing crucial insights for policymakers, investors, and economists to mitigate adverse economic effects and plan for long-term recovery.