The Russian invasion of Ukraine has already hit the financial markets and the economy worldwide. This conflict has accelerated Inflation on a whole new level after the pandemic. Both the countries only contribute less than 2% of the world GDP but this war inflicts severe damage on many countries and industries. This damage will mean hardships to millions of people in Russia, Ukraine, and also people from other countries due to this Ukraine-Russia crisis.
The Global Effects Of Ukraine-Russia Crisis
1. Petroleum And Oil
Russia is the third-biggest producer of petroleum and natural gas in the world. Russia’s attack on Ukraine would slow down Europe’s recovery from the pandemic. Europe imports 40% of natural gas from Russia. Due to the war, the supply is cut off. A cut-off in the energy source in the continent would mean the economy in that region will start falling or going undercut. High natural gas prices have already led to inflation in the market. The electricity generated through this will hike the electricity bill prices. The production of fertilizers will also have to cut back due to the price hike.
2. Food
Ukraine is the fifth largest producer and exporter of wheat in the world. The threat to the farms in Ukraine and the reduction in the exporters of wheat will hit the world economy. The price of food is already at a high level at this time since 2011 and the shortage of wheat in the market will hike the prices when there is already less supply and people will have to suffer.
The rise in food and oil/ gas will intensify inflation and this will pressure policymakers and central banks in the world.
3. Stock Market
The stock market in Japan, S.Korea, Hongkong, and Australia went down by 3% already. Dow Jones fell 1.38 percent and Nasdaq lost 2.6 percent on Wednesday.
Indian Stock Market Pointers
- The Sensex opened at a loss of 1800 points.
- Tata Motors – loss of 6 percent
- RIL- loss of 3.5 percent
- TCS- loss of 2.86 percent
- HDFC Bank- loss of 2.85 percent
Conclusion
If this Russia-Ukraine crisis escalates further, the market is going to face a lot of damages and the inflation will hike up more in various countries that are being affected by the war.
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