Soaring energy prices, fears of shortages of raw materials and certain products … Russia’s invasion risks delaying the planet’s economic recovery, in addition to the direct impact on Ukrainians forced to flee their country. I have. 19 pandemic. According to a report by the Organization for Economic Co-operation and Development (OECD) released Thursday, March 17, war could sacrifice global growth by one point a year and inflate inflation by another 2.5 points. “The economic turmoil is widespread and should continue,” said Secretary-General Matthias Corman. However, “the economic impact of the conflict is very uncertain and will depend on the duration of the war and the state’s response,” the OECD wrote.
- Russia and Ukraine, small role but important impact
“Russia and Ukraine have a weak role in the world economy,” the OECD said. It calculates the weight of two states at 2% of the world’s gross domestic product (GDP). However, these two countries continue to operate through many raw material export shares, saying they “have a major impact on the global economy.” It evokes wheat (two countries that account for 30% of the planet’s exports)-corn (20%), mineral fertilizers and natural gas (20%), and oil (11%). Not to mention palladium and nickel, or argon and neon (Russia and Ukraine), where Russia is the “major exporter”.
- Europe, the most affected region
Europe is the region most affected by the economic impact of the war, especially those that share common borders with Russia and Ukraine. The report specifically points out the energy dependence of Russia on the Old World. This is also one of the challenges of the European Council on March 10th and 11th, when 27 heads of state and government leaders came together in Versailles. Finally, European Commission President Ursula von der Leyen proposes “to implement a transition in favor of renewable energy” and “Russia’s gas and oil alternatives by 2027” “REPower EU” I talked about the plan. It is also one of the “resilience plans” ambitions presented by Prime Minister Jean Castex on Wednesday at the national level.
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- Risk of food insecurity in Africa and the Middle East
After the start of Russia’s military attack in Ukraine, wheat prices have already risen steadily for two years and have skyrocketed. Since both countries are major exporters, there are fears of shortages in developing and emerging countries that are heavily dependent on wheat from Russia and Ukraine. For “many economies in the Middle East,” wheat imports from the two war-torn countries “account for nearly 75% of total imports” of this product, the OECD explains. This is especially the case in Turkey, Egypt, Israel and Tunisia. Beyond the risk of economic crisis in some countries, institutions are afraid of “humanitarian disasters with a sharp increase in poverty and hunger.”
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- What kind of response does the OECD recommend?
Financial institutions recommend “targeted” budgetary assistance to support the sectors most affected by the current rise in prices. “It may be expected that taxes on the extraordinary profits of companies in the energy sector will fund these measures,” the OECD wrote. Low-income countries. ” We also demand “diversification of energy supply”. This includes maximizing existing resources, increasing liquefied natural gas (LNG) imports and accelerating investment in green energy.