Gloomy outlook for poorer countries as Russia-Ukraine war rages
Published:Saturday | June 11, 2022 | 12:09 AM
With no immediate end in sight to the conflict between Russia and Ukraine, a group of academics and diplomats on Friday painted a gloomy picture of the continued impact of the war on poorer countries and even those whose economies are relatively robust.
The discussion formed part of The University of the West Indies (UWI) Vice-Chancellor’s Forum on the Russia-Ukraine war, which was aired yesterday on UWItv Global.
Peter Cavendish, European Union ambassador to Trinidad and Tobago, argued that the war will have consequences in many areas.
He expressed alarm that the Russian Navy has embargoed the Ukrainian ships with grain in the Port of Odessa in Ukraine.
“This is impacting the poorest worldwide, be it the poor of Lebanon or the poor in Somalia,” he said.
The EU envoy charged that the weaponising of food in this way was unprecedented.
“We have seen now, perhaps never so brutally in modern times, the use of food as a weapon.”
Another panellist, Dr Theodor Tudoroiu, senior lecturer in the Department of Political Science at The UWI, St Augustine campus, bemoaned the consequences of the war to date, pointing to the heavy loss of human lives, destruction of infrastructure in Ukraine, the displacement of millions who have become refugees, and alleged war crimes committed.
He noted that apart from the ongoing crisis in Ukraine, the world was facing a significant surge in the price of energy and food.
Tudoroiu has also highlighted that the European economies that have imposed sanctions on Russia are themselves very seriously affected.
He argued that these elements might result in a global recession.
According to Tudoroiu, the fallout will also have negative socio-economic outcomes in the global South, including Latin America, the Caribbean and Africa.
Just this week, the World Bank forecast that some countries are facing recession with the impact of the Ukraine war on many economies that had already been rocked by the onslaught of the COVID-9 pandemic.
The bank signalled that less developed countries in Europe and east Asia are facing major recession.
The bank’s forecast for Jamaica is that it will not be impacted by the recession, although its growth projection has been revised.
Jamaica’s economy, according to the World Bank, is expected to grow by 3.2 per cent this year.
Stagflation risk
In its latest Global Economic Prospects report released this week, the World Bank said that the Russian invasion of Ukraine has magnified the slowdown in the global economy. It said that the global economy is entering what could become a protracted period of feeble growth and elevated inflation.
“This raises the risk of stagflation, with potentially harmful consequences for middle- and low-income economies alike,” the bank stated.
According to the bank, global growth is expected to slump from 5.7 per cent in 2021 to 2.9 per cent in 2022, significantly lower than the 4.1 per cent that was anticipated in January.
In April, the World Bank had said that Russia’s war against Ukraine had caused major supply disruptions and led to historically higher prices for a number of commodities.
“Most commodity prices are now expected to see sharp increases in 2022 and remain high in the medium term,” the bank had said in its outlook.
According to the World Bank, the price of Brent crude oil is projected to average US$100 per barrel in 2022, a 40 per cent increase from 2021.
It said that non-energy prices are expected to rise by about 20 per cent in 2022, with the largest increases in commodities where Russia or Ukraine are key exporters.
Wheat prices are forecast to increase more than 40 per cent this year.
Food prices and petrol in Jamaica have also been impacted by the Russia-Ukraine war.
The Statistical Institute of Jamaica reported that the annual point-to-point inflation rate at April 2022 was 11.8 per cent.
On Thursday, motorists were hit again in their pockets with another record high spike in the price of petrol.
Petrojam announced that a litre of 87 and 90 gasolene will sell for an additional J$4.50.
Since the beginning of the year, gas prices have skyrocketed by about J$45 per litre.