The Global Economic Fallout: Russia vs Ukraine

Where it all started?

The invasion began on 24 February 2022, the Russian army launched out of Belarus to target the Ukrainian city Kyiv, and from the northeast against the city Kharkiv. The invasion went down in the history books being the largest invasion on a European country since World War II. It is predicted to have caused tens of thousands of civilian deaths and hundreds of thousands military deaths. By April 2023 more than 8 million Ukrainians had fled the country, and the news and public went radio silent to this day. Schools are banned from talking about it and people act like there is nothing going on. But the truth is it is an ongoing global problem and I’m going to explain the true severe global scale of the matter.

The seemingly never-ending conflict between Russia and Ukraine continues to escalate while simultaneously affecting global stock markets. Russia’s invasion of Ukraine has sent reverberations throughout the world economically. This conflict continues to cause issues in the trading sector, especially in the EU. Europe may be the continent affected significantly trade-wise however countries located in Central Asia have also been severely impacted, with 36 currencies in Central Asia depreciating. This war has created a Global Economic Fallout and one that seems impossible to fix. A gaping hole has been left in the global economy which has drastically affected many countries who aren’t even slightly involved. This war has seemed to negatively impact the world with neither Russia nor Ukraine benefitting from this exchange.

Europe’s struggle

Europe’s reliance on Russia for energy is now over. For decades Europe and Russia have been reliant on one another for resources. Europe initially struck the deal to loosen the chokehold the Middle East had on them with crude oil petroleum, and natural gas reserves. However, this move has certainly not played out in Europe’s favour. According to the International Energy Agency 60% of Russia’s oil exports went to Europe as well as 74% of its dry natural gas. Many European countries were almost solely dependent on Russia for their energy supply. This has had devastating impacts starting an energy crisis for European countries.

Political, Economic and Social impacts on Africa

Africa, similarly, to Asia has been affected with fuel, food and necessary resources are inflating. Africa, however, is hit much harder as it is the poorest continent out there as they are heavily reliant on Russia for trade to generate a sustainable source of income. This is because Russia has a combination of interests in Africa: diplomatically, militarily, and economically. With a consistent amount of weapon trade between both countries and it also seeking to expand its operational footprint by signing agreements for new military bases. Egypt specifically being one of the richest countries in Africa is devastated by the war. Egypt was Russia’s leading trade partner during the war with the revenue gained from Russian imports and exports amassing to a total of 3.9billion US DOLLARS. Not only is Africa affected by Russia it is also affected by Ukraine with grain exports being crucial to building Africa’s economy. Before Russia’s invasion of Ukraine, in 2020, more than 50% of wheat imports came from Russia and Ukraine in 15 African countries.

Asia’s depreciation

The daily lives of many in Asia have been affected due to the inflation caused by the war. The rapid inflation is a cause for concern for many residents in Asia. The price of petrol in Vietnam has skyrocketed due to oil shortages and petrol hoarding. Ukraine and Russia are major wheat exporters. Whereas Ukraine is a key exporter of corn. The Philippines would be vulnerable to wheat supply shocks and Vietnam exposed to corn disruptions. But, despite that Tajikistan is the country most affected by Ukraine’s export restrictions, Food and Fertiliser Restrictions Tracker shows that Tajikistan relied on Ukraine for a mammoth 77.4% of kcal (kilocalories) in food exports. After Tajikistan the next most affected are Uzbekistan with 71.71%, then Azerbaijan and Turkmenistan with 63.17% kcal and 55.63% kcal separately.

Ukraine’s Ruin

Ukraine has already suffered unseen levels of damage not seen in Europe since the devastations of WW2 and it took 20 to 30 years for Europe, specifically Germany and the UK to recover from it. Ukrainians are fleeing the country in hope of salvation to date over 6 million Ukrainians have fled their country to seek refuge. Ukraine’s situation is truly dire. If this war continues the way, it is going the levels of damage to come seem ominous. Ukraine will not be able to withstand much more damage or casualties before having to surrender and having to rebuild for decades.

Russia’s Downfall

The depreciation of the Ruble (Russia’s currency) has been a significant factor in Russia’s downward spiral. The Ruble has been losing value at a rapid rate. It is currently equal to £0.0087 or $0.011. Causing it to get mocked online due to its value being worth as much as a vbuck (currency in a virtual game Fortnite). Russia has lost a lot of money due to it spending lots of money to bulk up their defences and strengthen their attacks on Ukraine. The huge amounts of money Russia is spending on its military resources is leading to a loss of value in the Ruble. The value of the Ruble has been frighteningly unpredictable as in 2022 it was one of the strongest currencies in the world to now being worth less than a cent. It suffered a huge fall from grace.

Political Effects and Affects On The BRICS

Russia’s invasion on Ukraine has caused chaos and many disturbances between global and regional politics. The BRICS have been affected similarly to many other countries with the inflation of food and natural resources. The BRICS empathise with the harsh reality of Ukraine’s current situation however most countries involved in the organisation have remained impartial to either side. The BRICS have tried everything in their power to put an end to this war but to no avail. The war continues to rage on as Russia is stubborn in taking land which they believe is rightfully theirs and Ukraine is determined to keep their land, with none willing to compromise with the other. Compromise seems impossible at this point regardless of the BRICS efforts.

Conclusion

Overall, I believe that this war seems extremely difficult to settle unless one of these sides gets what they want. Either Ukraine gains freedom from Russia or Russia overwhelms Ukraine and forces them to submit. Compromise seems impossible and Ukraine’s downfall seems inevitable, but I hope for the best not only for the future of these 2 countries but for the future of the world. The world is suffering, battling an energy crisis while Ukraine and Russia fight this war. I just believe this is a LOSE- LOSE situation. No one has gained anything so far in this war, Ukraine has lost lives while Russia has lost financial stability. The WORLD is only LOSING from this war.

SOURCES:

https://www.economicsobservatory.com/ukraine-whats-the-global-economic-impact-of-russias-invasion#:~:text=Source%3A%20International%20Monetary%20Fund%20(IMF)&text=For%20the%20people%20of%20Ukraine,undoing%2015%20years%20of%20progress

https://www.cbsnews.com/news/ruble-to-usd-less-than-a-penny-lowest-ukraine-war/

https://fpc.org.uk/the-impact-of-the-war-in-ukraine-on-the-brics-six-takeaways-from-an-expert-discussion/

https://www.statista.com

https://www.cfr.org

https://www.atlanticcouncil.org