War or any conflict like situation between nations always lead to consequences that hamper the global economy. According to various news reports, the protracted dispute might harm sectors that rely on the supply of raw materials, particularly industrial commodities, as Russia bears the weight of Western sanctions, which include cutting off several Russian banks from the interbank payments system SWIFT.
Furthermore, the consequences are endangering the global economy, causing financial markets to tremble, and making life more dangerous for everyone.
But, how are these sanctions impacting, and how will they impact in the future? Here’s a gist for you:
- Energy Sources
Many European countries rely substantially on Russian energy, particularly gas, which is transported through numerous key pipelines. Even if the situation is resolved, it is possible that the heavy economic penalties imposed on Russia will make it difficult for these countries to buy gas.
- Edible Oil
Ukrainian sunflower oil exports make up nearly half of all sunflower oil exports. Importers will struggle to replace supplies if harvesting and processing are hampered in a war-torn Ukraine, or exports are halted.
With major supply interruptions looming in India, firms are left with few options but to contemplate raising prices of daily-consumed edible oils within weeks. Over 70% of India’s crude edible oil demand is covered by imports, according to the country’s main edible oil producers. The proportion of sunflower oil is even higher.
- Currency and Stock Exchange
The Russian Ruble is in free fall, losing up to 40% of its value against the US dollar. The Moscow Stock Exchange was forced to close as a result of this. Russians are also prohibited from using Google Pay or Apple Pay for transactions as a result of the sanctions.
- Supply Chain
Companies are trying to obtain enough raw materials and components to make items to fulfil growing client demand due to the world’s unexpectedly rapid rebound from the pandemic slump. Shortages, transportation delays, and increased pricing have resulted from overburdened factories, ports, and freight yards. Industries in Russia and Ukraine may be disrupted, delaying a restoration to sanity.
- Transport
With global transportation already severely hampered following the pandemic, the conflict is likely to intensify the situation. Ocean shipping and rail freight are likely to be affected. While rail only transports a small percentage of total freight between Asia and Europe, it has been critical during recent transportation bottlenecks and is steadily increasing. Sanctions on Russia are expected to have a significant impact on countries like Lithuania’s rail traffic.
- Crypto Market
Following a drop in the value of Russia’s currency, Bitcoin and other cryptocurrency prices are surging. According to some analysts, Russian investors are shifting their money out of the ruble as economic sanctions against the country for its invasion of Ukraine take effect.
After plunging as low as $36,370 last week, bitcoin climbed to $44,188 on Wednesday. Other major cryptocurrencies, like Ethereum, Ripple, and Solana, were either unchanged or witnessed rises of at least 2%.
- Automobile
The war is predicted to have a significant impact on the automobile industry. The industry’s troubles are likely to be exacerbated by rising oil prices, a continuing shortage of transistors and circuits, and other rare earth metal shortages. Aside from that, Ukraine is home to a slew of enterprises that produce automobile parts for automakers.
Leoni AG, which sells wire systems built in Ukraine to European automakers, has closed its two Ukrainian facilities. As a result, Volkswagen AG had to close one of its German plants.
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