User Review( votes)
Impact on economy with current ongoing war: After globalization, any event in the world has several impacts in all parts of the world. The Russia-Ukraine war has major social, psychological, humanitarian as well as economic impact all over the world. It will not only affect the economic growth but also effect the inflation. The war is a severe blow to the world that is already suffering from post-COVID economic meltdowns.
The International Monetary Fund (IMF) has brought to notice that both Russia and Ukraine are major producers of the world. They are producers of oil and natural gas in the world. Not only automobiles, even the airlines and freight carriers will be severely hit by the rise in crude oil prices.
That is not all, both the countries together account for 30% of the world’s wheat exports. This means that the food prices in the world are also expected to rise. The ongoing war is not only a humanitarian catastrophe but will also lead to slower growth and rising inflation in the economy globally. The World Bank has estimated that the ongoing war crisis will bring additional 40 million people under the $1.90 per day poverty line.
In parts of Africa and Middle East, the rising food and fuel prices could escalate tensions, in an already weak and unstable economy. It may subsequently lead to more uprisings, unemployment and greater restlessness among the citizens.
Russia is the prominent provider of natural gas in Europe. The European economy will suffer from wider trade and fiscal deficits. They will also face steeper economic inflation. The ongoing war will also affect tourism and so many trade and services that are directly or indirectly related to tourism. Airspace closures, tariffs, travel restrictions and sanctions will hit the global economy for years to come.
The defense sector of India will also suffer a great blow. Russia is India’s largest supplier of weapons and it is estimated that around 80% of India’s military equipment are of the Russian origin. Ukraine and Russia are suppliers of raw materials that are used for manufacturing of the semiconductors. Ukraine is a leading producer of palladium that is essential for use in memory and sensor chips. The rising prices of metals will naturally affect the automobile industry that imports various metals from the war hit zone. Ukranian automotive factories supply major carmakers in Western Europe. War has affected this trade owing to various shortages and rising prices of raw materials.
The Indian pharmaceutical industry is also expected to suffer from the ongoing Russia-Ukraine war as India was an exporter of pharmaceutical goods worth million dollars to Russia as well as Ukraine. It should be noted that Russia is an importer of 18% of Indian tea exports. This is quite a number as Indian tea farms and tea workers are expected to suffer huge losses owing to the Russia-Ukraine war. Interestingly, India’s imports of sunflower oil comes majorly from Russia and Ukraine. The ongoing war will require India to look for other countries or other healthy substitutes of sunflower oil. This could have an impact on the economy.
Janet Morris has rightly said, “Wars don’t bring lasting peace, only lasting death.” Nothing less can be said about the ongoing Russia-Ukraine war. For more such news click here.