BAKU, Azerbaijan, June 8. The war in Ukraine will affect key manufacturing inputs beyond energy, Trend reports with reference to Euromonitor International.
“The global economic outlook has worsened substantially since February 2022, with lower expected growth and higher uncertainty. In the baseline scenario, global real GDP growth is expected to decline to 1.8-3.6 percent in 2022 and to 1.8-4 percent in 2023, after 6 percent growth in 2021. The war in Ukraine and economic sanctions on Russia have caused large reductions in Russian energy and commodity supplies, and major cuts in Russia and Ukraine food exports. The new adverse supply shocks have led to significant price increases for energy and food and declining global consumer purchasing power, especially for lower income households,” reads the latest report from Euromonitor International.
Reportedly, global inflation is expected to increase to 6.8-9 percent in 2022, before declining to 3.8-6.3 percent in 2023.
Global supply constraints have tightened substantially since the outbreak of war in Ukraine with big increases in energy and commodity prices, worsened by stronger pandemic restrictions in China.
“At same time, global demand reductions due to the same pandemic restrictions in China and Asia more generally and due to higher global uncertainty can alleviate tightness of supply constraints. Over a 1-3 years horizon, one of the worst spillovers from war in Ukraine is a large reduction in cereals and cooking oil supplies. The UN’s food price index inflation was 34 percent year-on-year in March 2022.
The UN estimates the current supply-demand mismatch could lead to another 8-22 percent increases in global food prices in 2022. The sharp increase in food prices is expected to cause a substantial increase in global poverty in developing economies in 2022-2023. Russia is a major producer of metals such as nickel and aluminum, while Ukraine is a major supplier of key industrial inputs such as neon. Therefore, the war and sanctions are also likely to cause substantial price increases and potential shortages of key global manufacturing inputs beyond energy,” the report says.
---
Follow the author on Twitter: @Lyaman_Zeyn