The Shared Economic Impacts of Russia's Invasion of Ukraine
Across various analyses, the conclusion is that it amounts to an unneeded shock to economies around the world still trying to pull out of the pandemic-induced damage. Expectations for global growth to slow, inflation to rise, and rippling impacts to diverse supply chains. A number of consumer price hikes and delays are expected, which we are all likely to experience.
“Russia’s invasion of Ukraine will slow global growth and raise inflation. J.P. Morgan Research views the macroeconomic impact largely through the commodity markets, while the financial linkages between Russia and the rest of the world are comparatively smaller.”
“So far, as of March 10th, J.P. Morgan Research has revised the global GDP growth forecast for the first half of 2022 down by 1.5%-pt at an annual rate, a drag that leaves global growth still running at potential. The forecast for global CPI annualized inflation in the first half of 2022 has also been raised to 7.1%, a multi-decade high and a 3%-pt annualized upward revision.”
The Russia-Ukraine crisis will slow global growth and raise inflation as global growth risk is linked to Russia energy supply disruption.”
Quoting from a D&B report: “Businesses around the globe continue to grapple with inflation brought on by the pandemic as well as commodity price increases brought on by disruptions to the supply chain.
“Amidst this ongoing volatility are the new consequences arising from the Russia-Ukraine crisis that could leave the world facing extended reductions to energy supply, severe sanctions that will likely impact food security as well as rare metal supplies needed to sustain production of key technologies.”
“Russia's invasion of Ukraine will affect the entire global economy by slowing growth and jacking up inflation, and could fundamentally reshape the global economic order in the longer term, the International Monetary Fund (IMF) said on Tuesday.
Beyond the human suffering and historic refugee flows, the war is boosting prices for food and energy, fuelling inflation and eroding the value of incomes, while disrupting trade, supply chains and remittances in countries neighbouring Ukraine, the IMF said in a post on its website.
It is also eroding business confidence and triggering uncertainty among investors that will depress asset prices, tighten financial conditions and could trigger capital outflows from emerging markets, it said.”
“We've never ripped an economy as large and as interconnected as Russia's out of the global economic fabric. Russia's economy is reeling, as intended, but you can't do that kind of extraction without hurting yourself in the process.”
“Gasoline and oil prices in the U.S. are soaring, as energy markets adjust to life without a supply of Russian oil and gas.”
“Cars: Price spikes in metals produced in Russia, like palladium and nickel, will filter out into U.S. inflation more slowly. The commodities are used to manufacture automobiles, both electric and gas-powered.”
“Expect more snarls, as energy constraints and commodity shortages could curtail manufacturing.”
Of course, beyond these economic impacts across our interdependent systems are the implications of the invasion for geopolitical and conflict & security futures. More on those rosy futures to come.