Russia – Ukraine conflict and its impacts on the world economy

Not only the global politics changed due to Russia-Ukraine tension, but it has some economic implications. The bloodless annexation of the Crimean peninsula affected global trade especially European Union trade where most countries in the union fulfill their energy requirements from Russian natural resources reserves.

The situation is quite the same as the 2008 Georgian conflict where the European Union, United States and NATO raised voices but neither the United States nor, NATO took any military action against Russia to safeguard Georgia. However this time some sanctions are imposed to pressurize Russian government and such sanctions will have not only impacts on Russian economy but also the world economy will feel the heat.

Global Impacts of Russia/Ukraine Conflicts

The tension in the region will have some serious impacts on trading of various commodities particularly food products, oil, gas and gold. The geopolitical importance of Russia and Ukraine is vital and both are considered major suppliers of these commodities. Russia is considered one of the top producers of crude oil along with its main competitor Saudi Arabia and also enjoying a position of No. 2 in the production of natural gas in the entire world. Ukraine in the region is the largest producer of grain and is considered to be the third and sixth largest producer of corn and wheat respectively, this year.

Having such status in the market of grain, wheat, oil and gas no one can ignore the importance of these countries. Any conflict or sanctions on Russia can put pressure on Russian economy as well as the world economy.

Over the last few years, Russia cut off gas supply to Ukraine twice because of payment disputes. Also, the pipeline used for supplying gas to Europe run through the territory of Ukraine so any type of tension can be felt throughout the continent.

Origin:

http://www.finance-money-economy.com/category/economy/