Russia's war on Ukraine was waged against one country, but its consequences have damaged many countries, including some of the world's most vulnerable, and with no end in sight, the economic toll of this war could be devastating in some parts of the world by the middle and end of 2022. .
In an article for Yahoo News, writer Rick Newman said that the economic shock from the Russian war on Ukraine will spread wider and deeper with the fluctuation of the Ukrainian economy and sanctions stifling Russian and Belarusian exports.
Ukraine's production could fall 45% this year, according to the World Bank, with Eastern Europe in recession by 4.1%, and Western Europe likely heading into recession as well.
For its part, Russia has stopped publishing some economic data, but it is also facing a deep recession, and the United States does not seem headed for a recession at the moment, but growth is slowing and consumers are pessimistic.
Neumann explained that poorer countries in Africa, the Middle East and Asia may suffer more than Europe or the United States, saying that Russian aggression is hitting the entire world in 4 main ways.
energy
Russia is the world's third largest producer of oil and natural gas, and many countries are trying to restrict or halt Russian energy purchases and deprive Moscow of much-needed energy revenues. $5 a gallon on average, the rise in energy prices in Europe, which relies more heavily on Russian energy, was more severe, and a full-blown energy shock could still occur, with prices rising dramatically.
food
The damage to global food markets is not as immediate as the damage to oil and gas markets, but some experts warn that disaster is looming. Before the war, Ukraine produced 30% of the world’s sunflower oil, 6% of barley, 4% of wheat and 3 % of corn.
Russia has blockaded all of Ukraine's ports on the Black Sea, which is the main way for Ukraine to export food to the rest of the world, and nothing moves through those ports, and rail links and roads to Europe cannot move all of Ukraine's production. The war itself could reduce the planting of future crops by 10% to 35%, according to estimates.
Russia is also a major exporter of sunflower oil, wheat and barley, and there are no direct sanctions on Russian food exports, but broad sanctions on other parts of the Russian economy cut those shipments.
Fertilizers are another problem, because Russia is the largest exporter of nitrogen fertilizers, and the Russian government has halted exports. Close allies Russia and Belarus are major producers of potash, a major component of many fertilizers. Sanctions affect potash supplies from both countries.
The rise in energy prices leads to a rise in the cost of food production, because agriculture and transportation become more expensive, since the beginning of the Russian war, wheat prices have jumped by about 30%, and sunflower oil has risen by about 50%, and the global cost of fertilizers has increased by 230%, which portends With higher food prices in the future, or lower yields by farmers who use less fertilizer.
The writer explains that the developed countries will be able to absorb the high prices and find alternative solutions, such as new sources of the required food, while the developing countries will suffer more.
A new report from Eurasia and Sustainable Strategies (DevryBV) estimates that the Ukraine war alone could increase the number of food insecure people by 101 million by the end of 2022, and the number of people living in extreme poverty could rise by as much as 201 million. The effects will be worse in parts of Africa, Asia and the Middle East, which get much of their much-needed food from Ukraine and Russia.
Other producers can eventually replenish food supplies, and as we learned from the COVID-19 pandemic, supply chains built over decades cannot be reconfigured within a month. Some countries are fortunate enough to have internal supplies that they can tap into, but many are. Depends on food from other places.
"The problem is not a shortage of wheat, it's a lack of enough ships to move it and a lack of money to buy it," Newman quoted Sarah Tapper, a crop advisor for Foreign Policy, as saying in April.
Destabilization
Russia may not mind that its brutality in Ukraine causes difficulties around the world, and Rudiger von Fritsch - who spent a decade as German ambassador to Poland and then Russia - told the German magazine "Der Spiegel" recently that "Putin's calculations He wants to destabilize Europe with new flows of refugees and intensify political pressure until Western countries give up their hard line against Russia. This is his new hybrid war.”
This would be similar to the strategy followed by Russia after its support of the Syrian government in the civil war there, which has led to the flight of more than 13 million refugees to Europe and elsewhere.
Shipping and transportation
"Covid-19" has complicated the world's sea lanes, and Russian militarism is now causing additional complications, with about 11% of the global shipping workforce from Russia, and 4% from Ukraine.
Potential wartime sanctions and obligations could cause labor shortages and worsen port congestion in some areas, much of the Black Sea off-limits to commercial shipping, and given the Russian blockade of Ukraine and the reluctance of insurance companies to write policies for roads anywhere near a war zone;
Shipping lines still ship non-sanctioned goods in and out of Russia to fulfill contracts, but most suggest they will stop shipping once contracts expire. This will hurt Russia, but cause unrest elsewhere as well.
The outcome of Russia's war in Ukraine is clearly unpredictable, and could end unexpectedly if someone overthrows Putin or Ukraine achieves a series of battlefield successes that seem out of reach at the moment.
One day, markets may enjoy a massive rally as the path to peace approaches, but until then, collateral damage is likely to spread to the global economy as the fighting continues.
In this way, Putin's war against Ukraine is a war against much of the world, according to the article.