Hot border: the global economy, sensitive to the turmoil in Ukraine

Disruption

The escalation around the issue is already causing turbulence in the economy due mainly to its energy dependence.

Russia is the main supplier of gas and oil to that continent, which is going through a severe winter in terms of weather and health due to freezing temperatures and the Variant Omicron of Sars-Cov-2.

The combination of these and other factors in a pandemic context has put pressure on the price of energy services and overheated inflation.

For this reason, several European countries – especially Germany – they fear that a shooting entry of Kremlin troops into Ukrainian territory paralyze the circulation of Russian natural gas that passes through that country and that lights the burners of homes and the boilers of many industries in the EU.

Moscow insists that an invasion of its neighbor is not in its plans. However, it promises to respond mercilessly to the economic sanctions additional to those applied since 2014 for the annexation of Crimea with which the United States, the EU and NATO intend that Vladimir Putin order the withdrawal of troops from his border with Ukraine.

Okay, but

In In this context, US President Joe Biden received Qatari Sheikh Tamim bin Hamad al-Thani at the White House last Monday, in what was read as a gesture of strengthening the bilateral economic alliance, at a time when Washington is seeking that its European partners understand that the rich gas and oil emirate in West Asia represents an alternative to Russian gas, in the midst of the Ukraine crisis.

From Brussels they thank Biden for his concern, but they remind him that Qatar currently supplies only 5.2 percent of the natural gas that the block buys in total, below Algeria (eight percent), Norway (16 percent) and Russia (41 percent).

Perhaps that explains why the Hungarian president, Viktor Orbán, assured this Tuesday to Putin that “no European leader wants war. We are for peaceful agreements”, alluding to the tensions in Ukraine.

Before his visit to the Kremlin, the Hungarian nationalist and social conservatism leader spoke by telephone with NATO Secretary General Jens Stoltenberg, with whom he agreed on the unity of the countries of the military alliance, both in times of peace and crisis.

Nobody safe

Gustavo Scarpetta, a specialist in International Trade, says that a possible Russian invasion of Ukraine “would imply negative effects for the world economy” at a time when it is going through the adverse effects of the coronavirus pandemic.

Based on this certainty, the professor at the National and Catholic universities of Córdoba disaggregates the areas that he considers would be most affected by possible hostilities.

“The price of oil and gas will rise and that it will have an impact on more world inflation and higher freight prices, which are already at record levels,” he says.

The expert recalls that Russia is the main exporter of gas to Europe, so “it could affect both economies”.

In relation to the growth in prices globally, Scarpetta highlights that it is a problem “that is affecting almost all countries due to aid packages and the broadcast”. And it foreshadows: “The increase in freight rates, of commodities and fuel can take it a couple of steps higher and fill central countries with concerns, which come working hard to lower it”.

From the hunch, he risks: “A world with inflation can lead investors to seek refuge in safe places to reduce uncertainty and others, seek markets where they can generate an income that provides real returns above inflation”.

Likewise, he believes that in Latin America some sectors of the economy, such as soy or wheat, could benefit in a context of crisis in Ukraine. Also, oil producers such as Ecuador, Mexico and Brazil would be favored.

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