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The global economy is at stake... Warnings of the repercussions of the "Ukraine war" Russia - Ukraine 2022-03-06 | 16:03 1,969 views Great fears surround the global economy, which has become threatened under the weight of the conflict between Russia and Ukraine, after the war entered its 11th day, while Western sanctions against Moscow expanded. The International Monetary Fund expressed its concerns about the impact on global economies of the current conflict, saying in a statement, "While the current situation remains highly volatile, the economic consequences will already be very serious." The fund noted a surge in energy and commodity prices, including wheat, which added to the inflationary pressures arising from supply chain disruptions and the recovery from the COVID-19 pandemic. The price shock will have an impact on the whole world, especially on poor families, whose expenditures are greater on food and fuel, according to the IMF. The Fund predicted that "more devastating" economic damage would occur if the conflict escalated, while the sanctions imposed on Russia would have a "serious impact" on the global economy and global financial markets, with tangible repercussions being transmitted to other countries. He stressed that the current crisis is creating in many countries an opposite shock in terms of inflation and economic activity, amid the pressure of already high prices, and the monetary authorities will have to carefully monitor the impact of high international prices on domestic inflation in order to determine appropriate responses to confront it. The Fund explained that the recently announced sanctions on the Central Bank of the Russian Federation will lead to the imposition of severe restrictions on its access to international reserves to support its currency and financial system. International sanctions on the Russian banking system and the exclusion of a number of banks from the SWIFT network significantly reduced Russia's ability to receive payments for its exports, pay for its imports, and engage in cross-border financial transactions, causing the Russian ruble to plummet. And the sanctions announced last week, led to the prevention of the two largest banks in Russia, Sberbank and “VTB”, from dealing in US dollars, and the West removed 7 Russian banks from the Swift system, a global messaging service that connects financial institutions and facilitates rapid payments. and safe. In a research note, Markets economist at Capital Economics, Oliver Allen, said Western democracies have surprised many by pursuing a strategy of putting intense economic pressure on Russia by effectively isolating it from global financial markets. He stated that if Russia continues on its current path, "it is very easy to see how the latest sanctions can be just the first steps in a sharp and permanent severing of Russia's financial and economic relations with the rest of the world." In turn, the expert in finance and investment, Mustafa Badra, said, according to "Sky News Arabia", that the global economy has incurred "losses in the trillions" as a result of the current conflict, and it is the people who bear the bill for this war. Badra explained that the Russian economy has a large volume of trade with the outside world, and therefore the punishment that will be imposed on it will affect most countries, in addition to the damage that will be caused by the rise in oil and food prices. The world is facing its biggest commodity shock in decades after the conflict in Ukraine cut off a quarter of global wheat supplies and Western countries continued to isolate Russia, the world's second-largest producer of goods, from the global economy. Data released by the Food and Agriculture Organization of the United Nations showed that food prices hit a record high in February, surpassing the previous record set in February 2011. Badra demanded the continuation of the warnings issued by international institutions, especially the International Monetary Fund and the World Bank, of the consequences of this war, because the effects will be huge on peoples, and the global economy is at stake. He explained that to remove the economic effects of this war, it would take months. Oil markets are still witnessing price jumps during the past days, as the prices of Brent crude futures (May delivery) stabilized in the morning to reach $118.11 a barrel, after touching $120 at the end of last week, the highest level since May 2012. This increase comes in Prices, although the oil and gas sectors were the only survivors of Western sanctions that targeted Russia in recent days, despite being the lifeblood of the Russian economy. Energy expert Ramadan Abul-Ela expected a continuation of the increase in oil prices, with turmoil in the markets until work is done to resolve the current crisis between Russia on the one hand, and Ukraine backed by the United States and NATO on the other. Abul-Ela said, "This is not new. It is natural for the price of oil to rise in such crises, and this was repeated before that in similar crises, when the October 1973 war broke out, prices rose by 4 times, when a barrel of oil was 3 dollars and reached 12 dollars, which was a record at the time. He stressed that "what is happening now is a similar image to what happened before... wars and political instability are causing an increase in prices." The energy expert explained that this increase in oil prices has many repercussions, as it will affect the amount of inflation in all countries, and economic growth plans, especially for emerging economies. He said, "Everyone knows that the rate of energy consumption and economic growth are two sides of the same coin, and they are linked to each other. When prices rise, economic performance indicators decline, and this is reflected in growth rates."