The threat of armed conflict on Europe’s borders will add another unpredictable variable to a global economy battered by the pandemic, supply chain bottlenecks and soaring prices.
Kremlin ordered the Russian army to enter the breakaway territories of Ukraine late Monday, but tensions have taken a toll, sending stock prices down and energy prices up. An outright attack could send food and energy costs up, spark inflation fears and spook investors, a combination that could threaten growth in economies around the world. gender, Patricia Cohen and Jack Ewing reporting for The New York Times.
Although its economy is only half that of Italy’s, Russia is still a major exporter of grain and a major supplier of oil, gas and raw materials that keep factories running. The effects of a potential conflict are likely to be less severe than those caused by the sudden shutdown at the start of the pandemic, but the damage can be intense in some countries.
Europe gets almost 40% of its natural gas and 25% of its oil from Russia, and is likely to be surrounded by spike in heating and gas bills, capital has skyrocketed. Russia is also largest supplier of wheat in the world, and together with Ukraine, account for almost a quarter of total global exports. For some countries, the dependence is even greater: That grain accounts for more than 70 percent of total wheat imports in Egypt and Turkey.
Ukraine, known as “Europe’s loaf,” actually sends more than 40% of its wheat and corn exports to the Middle East or Africa, where there are concerns that food shortages and continued price increases could cause social unrest.
And as usual, the burden falls on the most vulnerable.
“Poor people spend a higher share of their income on food and heating,” says Ian Goldina professor of globalization and development at the University of Oxford.
What happens to the global economy when conflict breaks out in Ukraine: READ FULL ARTICLE.
https://www.nytimes.com/2022/02/22/business/ukraine-energy-food.html The conflict in Ukraine could cause food and energy prices to skyrocket.