In a statement released last March 5th, the International Monetary Fund (IMF) warned that the Russian invasion of Ukraine and the corresponding economic sanctions against Russia and its allied nations will have a severe effect on the global economy.
To date, the amount of infrastructural damage Russia has wrought upon key Ukrainian cities is significant, and the resulting closure of seaports and airports has severely impacted the export and influx of goods and services within the region.
Among the primary sanctions imposed against Russia have been the removal of Russian banks from some international payment portals, including Stripe and PayPal, the refusal of key payment solutions like Visa and Mastercard to continue their services in the country, and even the revocation of several Russian banks’ access to SWIFT, one of the world’s leading financial messaging platforms.
All these will have a severe impact on Russia as well as its trading partners. These include several nations that may have a problem paying for Russian gas and oil imports critical for their respective economies.
What the Invasion Spells for the Economy
The economic impact of the ongoing invasion complicates an already difficult situation involving the recent spurt in terms of inflation and energy prices over the past year. Likewise, the regional tension could be felt in the performance of other economic indicators. The Dow, for example, posted its fourth straight week of losses as trading drew to a close on Friday, March 4th, dropping a record 200 points.
Fuel prices are another cause for concern as oil prices in the global market continue to rise to alarming heights, closing the week at almost $120 a barrel. This has prompted energy experts to issue a warning to the American public regarding how gas prices in the country have hit their highest in a decade and are expected to rise further.
Meanwhile, Goldman Sachs also released a statement that the rampaging price of oil was a key inflation risk for the United States. The same statement also offered a dire prediction: the price of crude oil is expected to soar to $150 per barrel if the price surge is not arrested any time soon.
Wheat prices also hit a 14-year-high as trading closed for the week, and other vital commodities are also expected to post price hikes in the next several weeks.