Russo-Ukrainian conflict shocks global commodity markets – The Peninsula

Russo-Ukrainian conflict shocks global commodity markets – The Peninsula

Doha: The 2020s are proving to be a period turmoil with shocks and uncertainty. Just when the global economy was seemingly turning the page from the COVID-19 pandemic, another significant event is producing negative geopolitical and economic consequences: the Russo-Ukrainian conflict. While the seeds of the conflict have been developing for years, the bilateral disputes between Russia and Ukraine started to escalate in 2021, before breaking into an open war in late February 2022.

Following the initial military invasion, the US and the European Union (EU) decided to support Ukraine by inflicting comprehensive economic pain to Russia via embargoes, sanctions and trade bans. With this, the Russian economy was quickly disrupted and to a large extent disintegrated from the rest of the world in less than a month.

In this piece, QNB highlights the main points about the economic consequences of the Russo-Ukrainian conflict.

On the one hand, the direct impact of the conflict on global demand is rather limited, due to the sheer size of both the Russian and Ukrainian economies. In fact, with a nominal GDP of $1.5 trillion and trade flows of $600bn, Russia represents less than 2 percent of either global activity or trade. Ukraine, a $155bn economy with