Today, Friday, marks one year since the start of the Russia-Ukraine war. What, according to “experts”, was going to be a short-term war, reached its first 12 months and everything indicates that it will last an indeterminate time.
The most relevant and invaluable costs, associated with human losses, leave as a balance the loss of at least 8,000 Ukrainian civilians and between 175,000 and 200,000 Russian soldiers wounded or killed, while on the side of the Ukrainian troops at least 60 thousand troops have died. It is a true human tragedy, like any war.
These balances are the most painful because the most valuable is lost, as we pointed out. But there are also economic costs.
destroyed infrastructure
According to figures from the kyiv School of Economics, provided this Thursday by Bloomberg, the balance of 12 months of war in Ukraine has left destruction in physical infrastructure for a total of 138 billion dollars.
If we consider that, in 2021, Ukraine’s GDP totaled 156 billion dollars, we have that the war has cost the country, only in destruction of physical infrastructure, the equivalent of 88.46 percent of the total. This means that, in economic terms, the country is destroyed; and if the war ended today, it would have to face a harsh economic crisis and its recovery would take between five years and a decade, according to the same source.
Ukraine was in the top ten of grain-producing countries, it was one of its main export products, and the nation was also entirely self-sufficient. This factor has also been destroyed.
But the effects of the war are not limited to the destruction of the infrastructure and economy in Ukraine, the world also resents the effects, these are some:
global effects
Economic slowdown and “growth trap”
The war in Ukraine slowed expectations of economic growth, but at the same time it plunged the world into the so-called “growth trap”; that is, it first caused the recovery of the global economy to slow down after the 2021 recovery, and then led to economic stagnation.
According to the growth expectations of the International Monetary Fund (IMF), growth expectations for 2022 fell from 3.5 to 3 percent, by 2023 they will barely reach 2.9 percent and in 2024 global GDP could reach 3.1 percent at most. hundred. The world is caught in the “growth trap” and is more likely to struggle moving forward than to be able to grow with more potential.
Energy crisis
Energy prices increased globally as the war progressed, although they subsequently decreased due to the economic slowdown, not because supply normalized. The lack of energy supply in Europe generated a crisis in the region and the redirection of billions of euros to try to reduce dependence on Russian oil and gas.
Drop in the price of oil
The drop in oil prices became a factor that seems to go against the logic of the war, but it is a product of the economic slowdown that has occurred, as well as measures such as the limit on production, imposed by OPEC, with the intention that prices do not fall further. At the start of the war, on February 24, 2022, a barrel of WTI was listed at 112.34 dollars, while this Friday a barrel of the same modality is listed at 75.89 dollars, which means a negative variation of 32.44 percent. The oil market has been severely affected and only measures such as the aforementioned cap on production have prevented a collapse in prices.
Impact on stock markets
The stock markets in the world have reported ups and downsalthough the primary trend is bearish or at least of intense volatility.
The most influential market, Wall Street, reflects the uncertainty generated in the world by the war and other measures or consequences such as inflation and the rise in interest rates, which we will talk about later.
The balance sheet of the largest capitalization stock market in the world, the S&P500, reflects a decrease of 5.04 percent in these 12 months. The Nasdaq, for its part, has plunged 11.10 percent in the same period, while the Dow Jones is almost unchanged, with a modest gain of 0.06 percent.
In the case of our stock market, the most representative, the IPC of the BMVreports an advance of 3.35 percent in the 12-month balance.
Inflation, a rebound that threatened to run away
The demand for products and services generated worldwide with the reopening of economies after the pandemic generated inflationary pressures that intensified with the war Russia Ukraine. The pressures were so intense that at one point they threatened to run inflation all over the world.; Only in the United States was a monthly inflation record of 9 percent reached, something not seen in 4 decades. The rally threatened to run amok and create major problems, which is why central banks had to act.
Rates, from the ground to the sky
When the war started 12 months ago, interest rates in the world were still close to or at absolute zero, where central banks took them with the global crisis generated by the pandemic. But global inflationary pressures generated upward pressures, what nobody imagined at first was how intense these pressures would be..
The Russia-Ukraine war was a determining factor for the rates to rise even more, they rose from the ground to the sky, since today the level of rates in almost the entire world had not been registered in at least two decades. In some cases it is even historical, as is the case of our country, since a nominal 11 percent had never been seen since Banco de México uses the reference rate as a monetary policy tool.
The above are just some of the global effects generated by a war that is supposed to be short-lived. The risk is precisely time; the more that happens, the more likely there are events that will continue to put pressure on the world economy. At the beginning of the decade, no one imagined that the world would experience a pandemic and a war in Europe. How many more surprises await us in these crazy twenties of the 21st century?
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