Statsguru: A year later, effects of Russia-Ukraine war on global economy

This week marks the completion of a year since Russia launched a military offensive against Ukraine on February 24, 2022.

There has been a reversal in the commodity market spike seen at the beginning of the conflict, which has so far claimed about 19,000 civilian lives and displaced millions. The war caused major disruptions in export of wheat from Russia and Ukraine — both countries accounted for about a fourth of the global wheat exports, besides other agricultural goods — and drove up food prices globally. The Food and Agriculture Organization Food Price Index climbed to its highest ever level on record but has now settled at levels seen before the conflict began.
 

The prices of metals such as aluminium have moved similarly, though nickel prices remain slightly above pre-invasion levels.

Energy prices have also cooled — amid a slew of Western sanctions on Russian oil and a reduction in the European Union’s imports of Russian hydrocarbons. Brent crude prices had spiked to as high as $133 per barrel in March 2022. It is currently around $81.5. The price of natural gas has moved likewise and is around half of what it was a year ago.

Russia has found a large market for its oil in India. By selling crude oil at a discounted price, Russia has displaced India’s traditional oil suppliers and accounts for a little over a fourth of the total oil imports, ahead of Iraq and Saudi Arabia.

Imports from Ukraine have taken a massive hit and declined by 91 per cent between the month before the invasion and December 2022 (for which data is last available). In fact, the import of some principal items such as fertilisers, inorganic chemicals, ores, slag, and ash have completely stopped.

The equity markets have shrugged off much of the initial decline as focus has shifted to other triggers. European and Indian stocks are both higher today than when the conflict began.