The looming danger of a war on the European Union’s border means yet another uncertainty for a global economy that has already been hurt by the pandemic, supply chain chokeholds and inflation.
The Kremlin ordered Russian troops into separatist territories of Ukraine late Monday, but the tension had already taken a toll, sending stock prices down and energy prices up. Actual fighting could cause food and energy costs to rise, worsen inflation fears and scare off investors, a combination that would threaten global growth.
Europe gets nearly 40 percent of its natural gas and 25 percent of its oil from Russia and is likely to be confronted with sharp rises in already-climbing heating and gas bills. Russia is also the world’s largest supplier of wheat, and together with Ukraine, accounts for nearly a quarter of total global exports.
Ukraine sends more than 40 percent of its wheat and corn exports to the Middle East or Africa, where there are worries that further food shortages and price increases could stoke social unrest.
The economic consequences of the conflict are likely to be most keenly felt by the world’s most vulnerable.
“Poorer people spend a higher share of incomes on food and heating,” said Ian Goldin, a professor of globalization and development at Oxford University.
