/data/photo/2022/02/14/620a874aaf89b.jpg?fit=%2C&ssl=1)
KOMPAS.com – In a month of conflict in Ukraine, global oil prices have soared, foreign companies have left Russia and Moscow is facing the specter of increasingly dire sanctions.
Reported AFP, here is the economic impact of the Russian invasion which began on February 24. A month of invasion, and further tearing apart the global economy.
Also read: Zelensky Asks Japan to Increase Sanctions Pressure on Russia
1. Commodities Soar
Oil and gas prices have soared on supply concerns as Russia is one of the world’s largest producers and exporters of fossil fuels.
Brent North Sea crude, the international benchmark, stood around $90 in February.
On March 7, it jumped to 139.13 US dollars near a 14 year high and prices remain highly volatile.
Rising prices have prompted governments around the world to take steps to ease financial hardship for consumers.
Start lower VAT in Sweden, price caps in Hungary, or discounts in France.
Also read: Zelensky slams UN before Japanese parliament: UN doesn’t work, fails to resolve conflict
Gas prices have also skyrocketed, with the European reference Dutch TTF surging to an all-time high of 345 euros on March 7.
Other commodities mass-produced in Russia have surged, including nickel and aluminum.
The supply chain of the auto industry is also facing disruptions as key parts come from Ukraine.
Also read: Belarus, Russia’s Main ally, Will it Join the Troops in Ukraine?
2. Food Threat
UN Secretary-General Antonio Guterres has warned that the conflict could reverberate far beyond Ukraine, causing “a storm of hunger and the collapse of the global food system”.
Russia and Ukraine are the world’s food barns, accounting for 30 percent of global wheat exports.
Prices of cereals and cooking oil have increased.
The United Nations Food and Agriculture Organization says the number of people who are malnourished could increase by eight to 13 million over this year and next year.
The United States, India and Europe can make up for the grain shortage. But it can be more complicated to replace sunflower and corn oil, which are the world’s number one and fourth exporters respectively in Ukraine.
3. Stock Market Shocks
The war has brought volatility to markets while the Moscow stock exchange was closed for three weeks and only partially reopened on Monday.
Western sanctions have crippled Russia’s banking sector and financial system, while the ruble has collapsed.
The measures include efforts to freeze $300 billion of Russia’s foreign currency reserves held abroad.
Russia is now at risk of defaulting on its debt for the first time in decades.
Moscow paid interest on two dollar-denominated bonds last week, giving the government some breathing room until the next debt payment in the coming weeks.
Also read: China says Russia is an important member of the G20 and cannot be expelled by other countries
4. Company Escape
Hundreds of Western companies have closed shops and offices in Russia since the war began. This is because of sanctions, political pressure or public opinion.
The list includes well-known names such as Ikea, Coca-Cola and McDonald’s.
Russian President Vladimir Putin has raised the threat of nationalizing foreign-owned companies.
Several companies have chosen to stay in Russia, citing their social responsibility not to abandon their local employees and rob residents of essential belongings.
Also read: Russia challenges NATO to war if it sends peacekeepers to Ukraine
5. Slower Economic Growth
War threatens to become an obstacle to global economic recovery from the Covid pandemic.
The OECD has warned that the conflict could inflict a one percent blow to global growth.
The IMF is expected to lower its growth forecast, which currently stands at 4.4 percent for 2022.
Get updates news of choice and breaking news every day from Kompas.com. Let’s join the Telegram group “Kompas.com News Update”, how to click the link https://t.me/kompascomupdate, then join. You must first install the Telegram application on your cellphone.–
