Multinationals should monitor a range of impacts across their global portfolios

The Russian invasion of Ukraine has started a domino effect that will shape the global outlook over the coming months and triggers a number of downside scenarios beyond Europe that MNCs need to prepare for. In response to the invasion, we’ve highlighted key planning assumptions and suggested actions for FrontierView clients. Given the importance of the situation, we’re sharing the details that we think you will find valuable as we assess the economic impact of Russia’s invasion of Ukraine.

We know there is a lot more to unpack here and want you to know that our team stands ready to support you in this volatile environment.

Suggested actions for MNCs:

  • Evaluate risks to your Russian business in terms of FX pressures, ability to maintain financial transactions with your local banks there, as well as overall demand dynamics and sanctions exposure risk.
  • Enact full contingency plans for protecting the safety of your people, assets, and partners on the ground in Ukraine. Redirect supply chains away from Ukraine if/where possible.
  • Pressure-test your assumptions around input costs for the next 3–6 months. Work with supply chain teams to find any possible cost savings or alternative sourcing options that would reduce the impact of high energy prices on your COGS.
  • Work with local teams to assess the impact of high energy and commodity prices on their local business. This could come in the form of transport costs, electricity prices, FX pressure, consumer prices with ripple effects on to business, salary negotiations, and others. Countries for immediate evaluation should include Turkey, India, CEE markets, as well as WEUR markets such as Italy and Germany.
  • If you were already struggling to evaluate appropriate pricing actions, assume that the input side of that equation has just become worse, and that the risk in terms of demand price sensitivity has also increased. Carefully evaluate the risk of consumer pushback on price increases even in major developed markets and prioritize pricing steps based on end-segments, country context, and product portfolios (which may need another look in these circumstances).
  • Ensure your monitoring activities at the global and local levels are set up for rapid and coordinated efforts. We are likely to see unexpected ripple effects from these events that could show up in many countries, commodity markets, and others and require a rapid response from your business.

Planning assumptions


The West has promised a unified stance and sweeping sanctions, following the sanctions announced earlier in the week. This will almost assuredly include most/all state-owned banks (including Sberbank), export controls on advanced technology, sanctions on Gazprom and Rosneft’s access to financing for new projects, and numerous more oligarchs, among other potential measures.

The critical question here remains what happens to energy imports from Russia, which in turn relates to the renewed potential of banning Russia from SWIFT. At the moment, it remains unlikely that either, 1) the West will put limits on energy exports from Russia (or otherwise sanction various insurance and shipping firms associated with the industry), or 2) Russia could potentially limit energy exports, driving up prices dramatically in an already-elevated inflation environment. Pertaining to SWIFT, this is assuredly back on the table for discussion and could be implemented, though with the blowback to the West and the ability to achieve much of the same results via sanctions on banks, it remains unlikely.

We anticipate more pressure on the ruble, pushing it toward the psychological boundary of 100 RUB to 1 USD. We expect the central bank to intervene to prevent it from breaching that level; however, inflation is likely to accelerate into the double digits, and we expect to see high interest rates as a result. We expect Russia’s economy to enter a shallow recession this year and are currently forecasting -3% GDP growth for 2022. The domestic market is unlikely to be severely disrupted, but MNCs will face challenges related to sanctions compliance, FX repatriation, and the processing of transactions given likely sanctions on major Russian banks, including Sberbank. There is also going to be some reputational risk associated with operating in Russia that companies will need to manage.


We expect that Russia’s invasion over the next several days will be to seize control of the entire nation and cause Ukraine to surrender and install a new pro-Kremlin government, unless President Zelenskiy agrees to effective surrender terms. Under the assumption of a new Moscow-backed regime, the new government’s purpose will be to fulfill Putin’s primary objectives, which fundamentally means altering the Ukrainian constitution to include a neutrality clause prohibiting it from ever joining NATO, and possibly the annexation of parts of Ukraine into Russia.

Expect significant loss of life and disruption to cities, critical infrastructure, transport, energy, and overall operations in the market over the coming days. We also expect significant domestic resistance against Russia even in case of capitulation, which could mean persistent terrorist attacks, sabotage, and other activities even if Russia manages to occupy Ukraine for a period of time. The result will be a drastic drop in the hryvnia, runaway inflation, and significant drops in GDP growth. MNCs need to act now to protect their people and assets on the ground and to evaluate supply chain linkages and other exposure in the market. It is unclear under what political conditions companies will operate as the situation evolves, making policy unpredictability exceptionally high as well. Our preliminary forecasts for the market are a severe recession (~10% YOY fall), matched with drastic hryvnia depreciation toward 40 to the US$ (limited by support from the West to prop up the currency), but these forecasts are likely to evolve over the coming weeks.

Energy prices

The immediate jump in oil prices above US$ 100/barrel following Russia’s invasion of Ukraine is the result of markets pricing in future risks to oil and gas supplies, rather than actual supply disruptions. In the immediate term, oil prices will likely hover in US$ 100–110 range, as markets weigh potential supply disruptions against potential new supply sources, with price risk tilted to the upside.

In terms of potential oil supply disruption, Western sanctions are unlikely to target direct Russian energy exports, but Russia may intentionally interrupt exports in retaliation against NATO or to protect its own supplies. Physical disruptions to supply are also possible as a result of damage to energy infrastructure in Ukraine or interruptions to oil transport around the Black Sea—either intentionally or by accident. Although energy markets are already pricing some of this risk, we anticipate that over the next few weeks, we will see drastic spikes and volatility in prices, with oil potentially reaching as high as US$ 150/barrel for short periods of time. In terms of potential new supply sources, we expect a coordinated international release of strategic petroleum reserves by major oil-importing countries, including the US, with the exact scale to be determined. OPEC is unlikely to expand supply except in the case of a serious supply interruption. Even less likely are actions by the Biden administration to force additional US production, or an early lifting of sanctions on Iranian oil exports—but these moves are possible in the event of serious supply disruptions. Actions to expand supply thus will ease pressure on oil prices, but the balance of risks suggests oil prices will remain above US$ 100/barrel for at least the rest of Q1.

European gas prices (Dutch TTF futures) have likewise surged more than 40% to above € 118 per MWh. As with oil, the jump is on speculation of future supply disruptions rather than actual disruption so far. A sharp spike in gas prices even beyond their current levels in Europe is a distinct possibility MNCs should prepare for. Unlike with oil, Europe has little recourse in terms of additional supply from other sources. While European governments have some ability to provide support to consumers and businesses, companies should expect further spikes in electricity prices with spillovers into consumer and producer prices.

Commodity prices

Several other commodities are likewise experiencing price jumps. Grain prices are already reacting on signs of actual transport disruptions as Russia takes control of a key port on the Black Sea in Mariupol, the primary export port for Ukrainian grains. The invasion is also likely to disrupt the planting season, resulting in a poor harvest that adds further pressure to global grain and sunflower oil prices in H2 2022. High gas prices will feed into global fertilizer prices, with knock-on effects on global food production and prices this year across a range of food commodities.

Prices are likewise surging across base metals, especially aluminum and nickel, primarily due to expectations that sanctions on Russia will disrupt base metals exports. With likely disruptions to Ukraine’s industrial production, production and exports of ferrous metals are also at risk.

Other ripple effects

Long term, there are risks to political stability across a number of markets as a result of the spikes in energy and food prices that will result from the invasion. We expect global inflation to be pushed upward and interest rates to rise further as a result. This event also increases the likelihood of more aggressive Fed interest rate hikes, with ripple effects on emerging-market currencies and borrowing costs. Energy-importing markets will come under particularly strong pressure in terms of inflationary risks, straining state coffers and putting additional risk on consumer sentiment. From a global growth perspective, we see the risk of a much sharper slowdown in the global economy over the coming months.

At FrontierView, our mission is to help our clients grow and win in their most important markets. We are excited to share that FiscalNote, a leading technology provider of global policy and market intelligence has acquired FrontierView. We will continue to cover issues and topics driving growth in your business, while fully leveraging FiscalNote’s portfolio within the global risk, ESG, and geopolitical advisory product suite.

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