What obstacles does the situation in Ukraine add to the world economy?

　　Xinhua News Agency, Beijing, March 1

　　Xinhua News Agency reporter Xu Chao

　　The situation in Ukraine poses major economic risks to the region and the world and could jeopardize some of the progress of the recovery, IMF Managing Director Georgieva said a few days ago.

International observers believe that the medium- and long-term effects of increased geopolitical uncertainty are cause for vigilance.

If the situation in Ukraine continues to be turbulent, it will impact the world economy from at least four aspects.

　　First, the global inflation situation has further deteriorated, mainly manifested in rising energy and food prices.

　　Brent crude oil futures prices in London and light sweet crude oil futures prices in New York both broke through the $100 per barrel mark in intraday trading on February 24, hitting a new high in more than seven years.

Some Wall Street institutions believe that considering the prospect of sanctions and counter-sanctions that may appear in Europe, the United States and Russia, oil prices breaking above 100 may not be the end of the energy price rally, but more likely just the beginning.

　　Russia is not only the world's major oil and gas exporter, but also one of the world's largest exporters of agricultural products.

According to data from the US Department of Agriculture, Ukraine and Russia together account for nearly 30% of global wheat exports, making them an important "granary" in the world.

Some analysts said that the food supply of some countries in the Middle East and Africa is heavily dependent on exports from Russia and Ukraine. The unrest in Ukraine may further push up food prices, increase the burden on people's livelihood in less developed countries, and even trigger local social unrest.

　　According to Christopher Miller, a researcher at the American Enterprise Institute, the world may experience "a new round of inflation."

　　Second, global supply chain disruption has intensified, mainly manifested in greater bottlenecks in manufacturing activities.

　　On the one hand, relevant military operations may affect air and sea shipping between Asia and Europe, causing disruption to the transportation of goods in related industries such as electronics and automobile manufacturing.

Data from the Maritime Traffic website of the international freight information platform shows that after the escalation of the situation in Ukraine, few ships pass through the Kerch Strait, which connects the Black Sea and the Sea of ​​Azov.

Typically, dozens of ships pass through the strait every day carrying commodities such as steel and grain.

　　On the other hand, raw materials such as palladium, nickel, aluminum and other raw materials with a large proportion of Russian and Ukrainian production in the world may become tighter due to the development of the situation, which will bring greater disruption to the production of automobiles, mobile phones, and medical equipment.

　　Third, it interferes with the expected trend of global monetary policy, which is mainly manifested in the further restriction of the central bank's policy space.

　　At present, the central banks of the major economies in the United States and Europe are planning to accelerate the tightening of monetary policy to curb inflation, and at the same time hope to avoid dragging down the pace of recovery due to excessive tightening.

The situation in Ukraine, while boosting inflation expectations, is weakening prospects for a recovery in economic activity, complicating the challenge of balancing inflation and supporting the economy.

The expectations of some market players are changing, believing that the Federal Reserve and the European Central Bank may be more cautious at their March monetary policy meetings.

　　Atsushi Takeda, chief economist at Itochu Institute of Economic Research, believes that monetary policy makers in major Western economies are faced with the choice of further tightening monetary policy or continuing to wait and see.

Against the backdrop of the escalating situation in Ukraine, the risk of failure of both monetary policy tendencies has grown.

　　Fourth, the impact on the process of global economic integration is mainly manifested in the fragmentation and politicization of financial and economic and trade links.

　　The United States and other Western countries have announced multiple rounds of economic sanctions against Russia, including the implementation of export controls to Russia, and decided on February 26 to exclude some Russian banks from the Society for Worldwide Interbank Financial Communication (SWIFT) system.

　　Analysts believe that the West's strong suppression of Russia in the fields of finance and trade may force Russia to further reduce economic exchanges with Europe and the United States in the long run, promote the division of the world into different economic blocs based on geopolitical factors, and bring headwinds to economic globalization.

　　The British "Economist" believes that the West's financial and economic suppression of Russia will not immediately lead to a global economic crisis, "but it will change the way the world economy operates in the next few decades."