The Russia-Ukraine issue, Europe’s most serious conflict since WWII, occurs at a critical juncture for the global economy. It has dashed prospects of a global economic recovery from COVID19’s ravages, at least for now.
Various pressures have strained the global economy since the World Health Organization (WHO) designated the COVID19 pandemic a public health emergency of international concern: unemployment rates and rising inflation, collapsing financial markets and tangled global supply chains.
The conflict between Russia and Ukraine has amplified each threat and confounded viable remedies. The consequences of this fight are jeopardising the global economy, increasing financial market volatility, and making life more dangerous for everyone on the planet.
Economic sanctions, commodity pricing, and supply-chain disruptions are the three main ways the Russia-Ukraine war has impacted the world economy and financial markets. This Special Issue will study the influence of the conflict on the behaviour of various economic agents and the disruptions and implications for national and global financial markets.
Ukraine and Russia are major producers and exporters of various food goods. According to S&P Global Platts, these are the top two sunflower oil producers, accounting for 60 per cent of global production. According to JP Morgan, these countries also account for 28.9% of worldwide wheat exports. The conflict between Ukraine and Russia has impacted supply systems in both nations. Russian exports are constrained due to sanctions, and Ukraine’s ports are closed due to the conflict.
The disagreement has already pushed wheat futures to 14-year highs on the Chicago futures exchange (Josephs, 2022). Russian oil and gas are used to heat homes, power enterprises, and fill gas tanks in many European countries. In just a few days, the battle has fueled global inflation by driving up the price of natural gas, oil, and other basic commodities. COVID-19 has exacerbated existing supply-chain concerns by threatening to destroy some transportation infrastructure (notable ports in Ukraine) and imposing financial restrictions on Russian shipments.
Because Turkey decided to restrict transportation through the Bosphorus and Ukraine’s decision to shut down sea freight routes, commercial shipping through the Black Sea will be restricted. Grain supplies transiting Russian, Ukrainian, Romanian and Bulgarian ports may be immediately affected.
During the coronavirus pandemic, this restriction will have ramifications for the entire world, particularly China, which relies on land-based routes through Russia (en route to Europe). Before the pandemic, aviation transport accounted for 35% of worldwide freight. The EU’s decision to block their airspace to Russian aircraft and cargo will drastically impede aviation traffic between Russia, Europe, Europe, and Asia.
This conflict will impact land-based trade routes, as transit through Russia would become extremely difficult (or impossible from a reputational, compliance, or safety perspective). These debates demonstrated the importance of SI in today’s financial knowledge base.