Head of Macroeconomic Research
Summary: In this brief, we expose the basic facts about the Ukrainian refugee crisis. This is part of our continuing efforts to better explain key events affecting the market. It is, of course, too early to understand the exact economic and political implications of this crisis. But we can already say this is the biggest refugee crisis facing Europe since WW2, with already more than 1.5 million refugees. This is only the beginning, unfortunately.
Total number of refugees from 24 Feb to 5 March : 1.5 million (source : UNHCR). Of which, around 1 million are now in Poland. Hungary, Moldova, Slovakia, Romania received more than 400,000 between them. About 5 percent of refugees (mostly coming from the Donbass) have headed east to Russia.
The below map is from 4 March. You can see the situation is evolving very fast on the ground. Three days ago, there were around 649,000 refugees in Poland. Now, it stands at 1 million.
This is the fastest growing refugee crisis in Europe since WW2.
The UNHCR expects that the number of refugees could reach 5 to 7 million in the coming weeks.
For the sake of comparison, there are more than 6.8 million refugees from the Syrian crisis – the world’s largest ongoing refugee and displacement crisis – and about 6 million refugees due to the Venezuelan crisis (a large majority of Venezuelans left the country for economic reasons). This gives you an idea of the scale of what is happening in Ukraine, right now.
The EU has dropped entry requirements to welcome Ukrainian refugees. Slovakia has opened its borders to refugees without travel documents, while the Czech Republic has lifted its ban on Ukrainians crossing without COVID-19 certificates, for instance. On 3 March, the EU interior ministers gave unanimous backing to a plan to grant temporary residency to Ukrainian refugees – this is expected to come into force within days.
Poland is in the front-line : Poland, already home to an estimated 1.5 million Ukrainians (both naturalized citizens and temporary migrant workers), has welcomed around 1 million of all new refugees.
Several fiscal measures have been unveiled to help the refugees and Polish citizens helping them :
Polish households will receive around 1200 zlotys per month (around 251 euros) if they host refugees at home. This will cost approximately 15bn zlotys a year (around 3bn euros).
On top of that, Ukrainian refugees will have access to family benefits such as :
· the “500+” child benefit programme - 500 zlotys monthly payment for every child under 18 years old, regardless of family income ;
· Family Care Capital – one-time payment of 12 000 zlotys for the second and subsequent children, regardless of family income ;
· and a Good Start – 300 zlotys payment for all students starting a school year, regardless of family income.
Political consequences : In several countries, the refugee crisis has created a sense of national unity and put domestic political issues on the backburner. In Poland, a poll by IBRiS for the Rzeczpospolita daily released on 4 March showed that over 90% of Poles support accepting Ukrainian refugees, while 64% say they are personally willing to help them. The center-left opposition is working hand in hand with the center-right government. This is quite unusual. France is going through a rally-round-the-flag moment too. An IPSOS poll released on 5 March shows that President Emmanuel Macron, who is now an official candidate, is above 30 % for the first time. The far-right candidates Marine Le Pen and Eric Zemmour are in the second and third position, respectively. Both are lower than in the previous polls (perhaps due to their previously loud Putin sympathies). However, it is still early days. Much can happen until the first round of the presidential election on 10 April.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
