Russia’s invasion of Ukraine is the last thing the still COVID-ridden global economy needed. In the light of this new situation, economy experts expose several scenarios; sadly, none of them are good!
So, how will the Ukrainian conflict impact economies around the globe? Experts say through disruptions in oil, gas, and cereal grains exports, among others.
Indeed, just a few days into the conflict and the world faced an oil price surge; an 8-year record of $100 per barrel. Likewise, in Europe, gas prices were up by an alarming 62%!
According to data from 2020, Russia is the third-biggest oil and the second-biggest natural gas producer. So, any problems in this regard will mean increased oil and gas prices.
If any of the major gas pipelines under Ukraine is damaged, this could bring another shock on energy prices, particularly in Europe. This could incentivize the US to export some of its natural gas to Europe, further raising its prices.
Plus, knowing that the rising energy prices are the leading factor of inflation, the hopes for economic recovery fade with each passing day. Moreover, the high prices of shipping and transportation will further increase food prices.
Add to this the fact that almost a third of global wheat exports come from Russia and Ukraine; namely, 12.28% of the world’s export of corn comes from Ukraine (fourth worldwide).
Spending more on heat, energy, and food will make households less likely to spend money on other goods, causing stumped growth and fewer opportunities for firms to acquire investments.
And this is without even factoring in the sanctions imposed on Russia and the possible Russian retaliation in the form of a mass cyber-attack.
At the moment, anything is possible.
