Russia’s war and the global economy

Russia’s war and the global economy

NEW YORK – Now that Russian President Vladimir Putin has launched a full-scale invasion of Ukraine, we must consider the economic and financial consequences of this massive historic development. The Ukraine war is not just another minor, globally inconsequential conflict of the kind seen in recent decades. This is a major escalation of Cold War II, in which four revisionist powers – China, Russia, Iran, and North Korea – are increasingly challenging the long global dominance of the United States and the Western-led international order that it created after World War II.

The risk now is that markets and political analysts will underestimate the implications of this global regime shift. By the close of the market on February 24 – the day of the invasion – US stock markets had risen in the hope that the war would slow down rate hikes by the US Federal Reserve. Yet in terms of the broader economy, a global stagflationary recession is now highly likely. Analysts are asking themselves if the Fed and other major central banks can achieve a soft landing from this crisis and its fallout. Don’t count on it. The war in Ukraine will trigger a massive negative supply shock to