(Finance and Economics) The conflict between Russia and Ukraine drags down the world economy and Europe's "following" sanctions frequently cause troubles

  China News Agency, Beijing, March 31, Question: The Russian-Ukrainian conflict drags down the world economy and Europe's "following" sanctions frequently cause troubles

  Author Liu Wenwen

  Since the escalation of the conflict between Russia and Ukraine, the United States and Europe have continued to increase sanctions against Russia, with various tricks: imposing financial sanctions, closing airspace to Russia, prohibiting new investment in Russian energy...

  It can be said that in terms of sanctions against Russia, Europe is "following" the United States, and the pace is gradually converging.

However, in the process, Europe has gained infinite troubles.

  unprecedented food crisis

  Affected by the war, as major exporters of agricultural products, both Russia and Ukraine's grain exports are expected to decline.

Ukraine's agriculture minister said a few days ago that Ukraine's 2022 spring crop acreage could be reduced by more than 50 percent compared to 2021.

  The "European granary" is in an emergency, and the food supply gap has increased, causing food prices to rise.

The European Commission said in a statement that rising food prices could make it difficult for low-income households in Europe to access food supplies.

In fact, in addition to grain, the prices of fertilizers, feed and fuel have also risen sharply, causing European farmers' production costs to skyrocket.

  In order to alleviate the problem of food supply, the European Commission decided to temporarily allow farmers to use fallow land to expand the cultivated area, in order to reduce the possible impact of Ukrainian crop production reduction on the EU market.

  French President Emmanuel Macron said the conflict between Russia and Ukraine is causing an unprecedented food crisis.

The conflict has made it difficult for many countries to obtain regular supplies of wheat and cereals, a situation that will become more severe in the next year to a year and a half.

  Gas and electricity prices soar

  Due to the relative lack of its own resources, the EU is highly dependent on Russia for energy supply.

Taking natural gas as an example, Russia is the most important natural gas supplier to the EU, accounting for 45% of EU natural gas imports in 2021.

Ukraine is an important hub for Russian natural gas to European countries, and the conflict between Russia and Ukraine obviously poses a serious threat to the stable supply of natural gas in Europe.

  Lin Boqiang, dean of the China Energy Policy Research Institute at Xiamen University, pointed out that the shortage of natural gas has triggered a rapid rise in the price of natural gas in Europe.

At the same time, electricity prices in major EU economies such as Spain and Germany also rose together, breaking record highs.

  According to data compiled by the German Statista agency, as of February, Greece had the highest average monthly electricity price in Europe, reaching 211.7 euros per megawatt hour, equivalent to 1.48 yuan per kilowatt-hour.

  The unreasonable skyrocketing of gas and electricity prices has led to a substantial increase in the production costs of European companies and people's living costs.

Suffering from the double troubles of oil and gas supply crisis and soaring prices, Europe is committed to increasing the sources of energy supply and accelerating the pace of energy transition.

  Joseph Borrell, the EU's high representative for foreign affairs and security policy, said that the EU is committed to diversifying its sources, and the Middle East will play a more important role.

At the same time, the development of renewable energy also helps to reduce the consumption of related resources.

  Li Keping, former general manager of China Investment Corporation, said that the EU has been formulating and adjusting its energy plans recently. The adjustment process is very difficult and its plans are becoming more and more radical.

It seems an inevitable and imperative choice for Europe to accelerate the replacement of traditional energy structures with new energy sources.

  It is reported that German Deputy Chancellor and Minister of Economy and Climate Protection Robert Habeck recently went to the United Arab Emirates to finalize an import agreement. It is expected that blue hydrogen will be imported from the United Arab Emirates for the first time this year.

  Despite this, Lin Boqiang also reminded that although the EU is actively drawing a vision of energy independence, it is difficult to avoid the real risks caused by excessive dependence on Russian oil and gas in the short term.

 Inflation intensifies

  Under the Russia-Ukraine conflict, rising energy prices exacerbated the upside risk of short-term inflation in the euro area, and rising food prices added fuel to the fire.

  The EU's headline inflation rate rose to a record high of 6.2% in February from 5.6% in January, Eurostat data showed.

  The latest data showed that Spain's inflation rate reached 9.8% in March, the highest level in nearly 37 years.

German inflation rose 7.3% year-on-year in March, beating economists' expectations.

  European Central Bank President Christine Lagarde warned that the conflict between Russia and Ukraine and the "uncertainty it creates on all fronts" could raise risks.

Inflation in the euro zone could exceed 7 percent this year as the conflict between Russia and Ukraine pushes up energy and food prices.

  Inflation remains high, adding to the uncertainty of the European economy.

According to the OECD assessment report, the world economic growth rate will drop by one percentage point this year because of the conflict between Russia and Ukraine; and the economic growth of the euro zone will be hit the hardest.

The European Central Bank has cut its growth forecast for the euro zone economy this year to 3.7%.

  There is no doubt that when Europe faces severe inflationary pressures and the risk of economic downturn, the global economy will also be more uncertain.