There is no doubt that wars constitute a catastrophe not only for the two sides of the conflict, but also for the whole world.
The current Russian-Ukrainian crisis is the best proof of this, as its consequences have extended to strike the whole world and everyone is affected even those who do not participate in this crisis.
A heavy blow has hit the global economy as a result of the continuation of the war in Ukraine, which has exacerbated the energy crisis, increased food prices as a result of the collapse of supply chains, and the world entered a new wave of inflation.
The crisis between Russia and Ukraine could well become a third world war – not a shooting war, but an economic conflict.
The ongoing conflict will have a negative impact on global financial markets. Its impact will be felt all over the world and the strength of its negative impact will be determined by the duration of the war.
Increasing energy and food prices will lead to a significant hike in inflation in developing countries and in some countries that suffer from inflation, especially in Latin America, where central banks will try to raise interest rates to fight inflation.
According to a statement by the International Monetary Fund, the economic consequences of the war in Ukraine are already very serious. A boom in energy and commodity prices has added to inflationary pressures arising from supply chain disruptions and the recovery from the Covid-19 pandemic.
The report added that the price shock would have an impact on the entire world, especially on poor families whose expenditures on food and fuel constitute a huge chunk out of the household budget.
If the conflict escalates, the economic damage will be even more devastating, adding to the complexity of the political landscape as the global economy recovers from the coronavirus pandemic.
Data from the Food and Agriculture Organisation of the United Nations show that food prices hit record highs in February, breaking the previous record set in February 2011.
The National Institute for Economic and Social Research in the United Kingdom has predicted that the world’s gross domestic product will decline by 1 per cent by 2023, amounting to a trillion dollars, and global inflation rates will rise by 3 per cent this year and two per cent in next year.
It also expected that Europe will be most affected by the current conflict, given the nature of the trade relations between the two parties to the conflict on the one hand, and the rest of the continent, and that emerging economies would be less affected by the repercussions of the war than the advanced economies.
In general, the Ukrainian war will negatively affect two important global variables: the global inflation and growth rates. The Ukraine war will exacerbate the global inflation rate due to the significant rise in the costs of global energy, minerals and grains, which contribute significantly to the production of global goods and services, as well as by the crisis of supply chains.
The global economic growth rate will also be affected by war, rising uncertainty, loss of trade with Russia and Ukraine, and rising energy, raw materials and food prices.
Those who planned the Ukrainian crisis and presented Kyiv with false guarantees thought that they would set a trap to involve Russia in a military war, then launch an economic war on it through sanctions to stop its development plans and put it under populist pressure that might topple Russian President Vladimir Putin.
However, the scheme overlooked the price paid by the Ukrainian people and government, which amounts to destruction and division of the state’s potentials. Nor did it care about the suffering of its allies in Europe.
Moreover, if the steady rise in prices continues, the United States will face large-scale protests against the upcoming US administration over the mid-term renewal. So everyone will try to douse the fire of war before it devours everyone.
As for the local situation and the impact of the Russian-Ukrainian crisis on the Egyptian economy, there is no doubt that there are effects, but the Egypt’s economy is now in a better situation, and as it was able to overcome the coronavirus crisis, it is able to overcome this one.
Indeed, there is an improvement in economic growth indicators, according to the testimony of all international institutions. Also, having a cash reserve of about $41 billion, the Central Bank of Egypt recently announced, making the Egyptian government able to meet import needs, whatever their source.
The bottom line is that wars are manmade disasters, but its fire affects everyone, even those who lit it in the first place.
