Western countries have imposed severe sanctions on Russia but the economic fallout could also have a major financial impact on people around the world - from the availability of food to the cost of energy and petrol.
1. Escalation of Gas/ Oil Prices
Russia is the world's largest natural gas exporter. People in the UK and Europe are already paying high prices for energy and fuel. The Russia-Ukraine conflict is expected to drive these prices even higher. Oil price jumped to its highest level in more than seven years, while future gas prices have increased 60% in just one day.
Martin Young, an analyst at the banking group Investec, has warned that household fuel bills in the UK could reach an annual £3,000, while motoring groups said average petrol prices had already hit a record high of nearly 149.5p on Wednesday, with diesel at 152.83p.
Russia is the second-biggest exporter of crude oil, and the world's largest natural gas exporter, which is vital to heating homes, powering planes and filling cars with fuel.
The UK gets only 6% of its crude oil and 5% of its gas from Russia. The EU, however sources nearly half of its gas from Russia.
But customers could still be hit in other ways - if airlines decide to pass on the rise in costs of aviation fuel, the price of a plane ticket could get more expensive.
2. Food Prices Could Go Up
Ukraine has been called the "breadbasket of Europe". Russia and Ukraine export about a quarter of the world's wheat and half of its sunflower products, like seeds and oil. Ukraine also sells a lot of corn globally. Analysts have warned that war could impact the production of grains and even double global wheat prices.
More than 40% of Ukraine's wheat and corn exports go to the Middle East or Africa - and disruptions to supply could affect availability in these areas.
3. Higher Inflation
Inflation, which measures how fast the cost of living rises over time, hit 7.5% in January in the US - the highest level seen there since February 1982 - and rose by 5.5% in the UK.
But it could hit close to 10% in major Western economies if the cost of energy and food is pushed up by dwindling supplies, according to the Centre for Economics and Business Research.
That might encourage the US Federal Reserve or the Bank of England to increase interest rates. Consequently borrowing costs for businesses, homeowners and others will be higher.
4. Stocks Will Fluctuate
Russian stocks crashed by as much as 45% in the wake of the Ukraine invasion, with banks and oil companies among the worst affected. It also led to steep falls on stock markets elsewhere around the world: in Europe the UK's FTSE 100 index fell more than 3% while Germany's Dax index was nearly 5% lower.
Many people's reaction to stock market changes is that they are not directly affected, because they don't invest money in stocks and shares. But there are millions of people with a pension whose savings are invested in the stock market.
Widespread falls in share prices, such as those triggered on last Thursday, are likely to be bad news for passive investors.
Some investors or savers might look to protect their money or assets by moving them to traditional "safe havens", like gold, especially as the markets are likely to see more volatility as the crisis develops.
5. Cars could get pricier
The car industry was already reeling during the pandemic from a chip shortage and supply chain problems. Russia is one of the world's largest suppliers of metals used in car manufacturing, such as nickel, which is used in lithium-ion batteries, and palladium, which is used in catalytic converters.
If supplies of these metals are not cut-of in retaliation to sanctions, the supply problems could worsen, with car firms having to find alternative sources.
Countries such as South Africa and Zimbabwe produce substantial amounts of palladium, but demand has been increasing and prices could rise as a result.
Russia is also home to manufacturing hubs for brands like Stellantis, Volkswagen and Toyota. Factories in the region could struggle to operate under sanctions, potentially hampering production and the availability of new cars.
6. Lower Economic Growth
With oil prices higher, supply chain disruptions, GDP growth of major economies will dent by at least 1%.
Whatever the reason for the invasion, the fragile economic recovery is now going into a tailspin. It will impact most nations unless it is a closed economy. So, it is good for us to brace for impact.
Reference:
Ukraine conflict: Five ways life could get more expensive, Lora Jones, BBC News
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