THE EFFECT OF RUSSIA UKRAINE WAR ON THE WORLD ECONOMY

• 2023-02-02
• ICA Admin

THE EFFECT OF RUSSIA-UKRAINE WAR ON THE WORLD ECONOMY

After almost a yearlong armed war between Russia and Ukraine, the geo-political tensions are rising. According to Reuters, it is estimated that more than forty two thousand people have lost their lives among which tens of thousands are civilians. History is long witness of tensions between Russia and Ukraine since 2014 itself but the level of escalation this time has shattered the so called international protocols, treaties and security alliances. 

There has been a huge humanitarian crisis in the Ukraine. Thousands of people have fled to seek refuge in East European countries and thousands of families are in the verge of a complete breakdown. The war has its toll on the Ukrainian as well as the Russian economy but the spillover effects can be seen all over the world.

The increase in energy related costs and services in Europe has reflected upon high transportation costs, higher fuel costs, eventually leading to a higher rate of global economic inflation. Adding to that the geo-political and strategic rivalry between Russia and the US has also become a major concern. This rivalry dates back to the World War. 

The increase in high national debts worldwide is also one of the major economic concerns. This has been seen as one of the major economic spillover effects of the Russia Ukraine War on the global economy. 

Supply restrictions of energy and other exportable items from Russia to Europe and US-allied countries has been the main reason behind this. The COVID-19 pandemic has already slowed down the economic growth rates of countries globally, and now the war has had a more crippling effects on the same. 

On a micro scale the Russia-Ukraine war has led to the decrease in the purchasing power or parity of common households all across the war. The inflationary pressure on economies due to rising food and energy prices are one of the major causes for this. 

Food crisis spurted by the blockade of grain from Ukraine has triggered outbreaks of food crisis situation to its grain importing nations from Africa and the Middle East. Grain export is one of the major export items of Ukraine and it feeds more than 400 million people around the world, mainly from Africa and the Middle East, adversely affecting the GDP of both Ukraine and the importing countries. 

These systemic disruptions in trade and balance of payments has caused a far-cry in the international political arena. The United Nation (UN), The European Union (EU), North Atlantic Treaty Organization (NATO) and other multi-lateral institutions have strongly condemned Russia’s military actions over Ukraine, while at the same Belarus and Iran alike have vocally supported the Russian strategy. 

This is a time when the world polity is divided, but it is sure that the road to economic recovery from the Russia-Ukraine war is still distant.