Synopsis. 1. Share markets around the globe have stumbled drastically. 2. Value of many currencies have fallen. 3. Oil and gas prices have soared.
Pandemic has hit the demand and supply chain very hard and created a mess. Post corona countries are in recovering stage. The economy of different nations was recovering but this invasion would change many scenarios in the world. What will be the impact of this on the world economy and geopolitics? Would the Russian economy crumble? Would there be a world war?
Geopolitical impact on the world
Russia has done something like in the past also. In 2008 Russia attacked Georgia and divided it into two. The reason behind this was same Georgia was being pro the US and its allies. In 2014 Russia has annexed Crimea. As a reply, the US and its allies had imposed many sanctions on Russia.
Sanctions are not a new problem for Russia they have faced in the past and most probably they are ready for it. Putin has made his move in a calculated manner. So he must have calculated the risk of sanction and how to deal with it.
Russia does not want to allow NATO and its allies to come near its border. So most probably like Georgia, they would divide Ukraine into some parts.
The relationship between US-allied countries and Russia would worsen after this invasion. In Asia, China and India would carry out their relationship with Russia as usual. Other than those big countries in Asia, Russia has got some friends who will support them further. In a nutshell, Russia pro countries would remain the same.
Impact on trade and economy in the world
Globalisation has resulted in the interlinking of the world economy. Nowadays the whole world will face the impact of major events in the globe. Geopolitics and trade relation is different things to talk about. Both of these does not go hand in hand. Despite sanctions imposed on Russia, the US and its allies have continued to carry forward trade relations with Russia in the past.
Russia exports crude petroleum, refined petroleum, coal, petroleum gas, gold, raw aluminium, copper, food grains, etc. Countries that used to export from Russia would feel the heat more than the countries that don’t have trade relations.
Yesterday the stock of major countries like India, Japan, Australia, etc was hit hard. China’s Shanghai stock exchange fell by 59.9 points, Japan’s index Nikkie fell by 1.81%, London’s financial times stock exchange fell by 2.95%, Germany’s DAX index fell by 4.69%. Cryptocurrencies have followed the same trend for example Bitcoin’s value fell by 6.29%. Gold and Silver prices also soared. The oil prices have soared up above $100 per barrel, the first time since 2014. Also, gas prices have soared up to $4.57 per gallon. This will increase inflation in the whole world. Countries that are facing inflation would be hit worse than the others. For example inflation in the US was at a record high and now it would soar up. As a result real consumer income would be affected.
The US and its allies have announced to impose many drastic sanctions. It would be worth watching what sanctions they impose because most of them are seriously dependent on exports from Russia. Many European countries import about 41% of CNG from Russia. Russia also exports key elements of semiconductor products to the US. In the nutshell, sanctioning Russia would not be a cakewalk for the US and its allies if they do so they would have to pay a dear price. The US can solve CNG and oil prices by exporting as the US is not using its oil reserves for now. If they do so it would hit Russia very hard more than the so-called sanctions because most of the income of Russia is from oil and gas export.
Ukraine is Europe’s top producer of uranium and has vast deposits of titanium, manganese, iron and mercury, also they are large exporters of corn, wheat and other grains in the world
Yemen imports 22% of its wheat consumption from Ukraine, Libya about 43%, Lebanon roughly half. They would have to spend more than before to fulfil their requirements.
Would there be world war 3
For now, it doesn’t seem so because world leaders have announced only sanctions, not any military actions. It’s on Putin and the other world how they carry forward this situation.