Economic Shocks Caused by the Russian Invasion of Ukraine (Essay Sample)

Economic Shocks Caused by the Russian Invasion of Ukraine
The article titled “Ukraine war has stoked global food crisis that could last years, says UN" by Martin Farrer, dated May 19th, 2022, highlights the economic shocks resulting from the Ukraine War. As history has taught humanity, wars cause big economic shocks. For instance, the 1973 Yom Kippur triggered high inflation of key commodities as oil prices skyrocketed. Similarly, the ongoing conflict between Russia, a key energy exporter, and Ukraine, an important exporter of vital commodities such as wheat, is causing huge economic shocks. The Ukraine war is set to cause massive trade disruption, financial instability, high commodity prices, and a humanitarian crisis.
The Russian invasion of Ukraine is hitting hard on world economies. Even before the invasion, the global economy had not yet recovered from the devastating economic and financial effects of the COVID-19 pandemic (Wolf). Inflation was already high, and supply disruptions were persistent. Central banks set the monetary policy of many nations to tighten to curb high inflation. Moreover, there were growing tensions between the West and China, a high risk of global recession due to many defaults, and financial disruption. Hence, the Russian invasion of Ukraine added flames to the fire. The invasion is a disruption multiplier in a world already facing massive disruptions.
The conflict has generated a humanitarian disaster of unfathomable proportions. The Russian incursion inflicts a severe blow on the Ukrainian economy and has caused extensive infrastructural destruction. Before the February invasion, Ukraine was considered the world's breadbasket, exporting 4.5 million tons of agricultural products each month via its ports, including 12 % of the world's wheat, 15 % of its maize, and 50 % of its sunflower oil (Farrer). With the ports of Chornomorsk, Odessa, and others blocked off from the rest of the world by Russian warships; the supplies can only move through clogged, inefficient road routes. The cost of goods and services has risen. In March, the agriculture and price index of the United Nations hit an all-time high of about 160 points before declining by 1.2% or 0.8% in April. In March, both the cereal and meat price indexes reached all-time highs. Wheat traded in Chicago for US$674 a bushel in 2021. As of May, it sells for $1.24 a bushel; a price nearly doubled due to the lack of supplies.