Ukrainian War: Will the French Economy Really Affect?

Ukrainian wheat field (© Nikolais / Adob ​​estock)

“Our agriculture, our industry, and many business sectors are suffering and will continue to suffer. Emmanuel Macron was in good shape on Wednesday, March 2, 2022. War in UkraineHead of State insisted About the impact of the Russian invasion on our economy.

Is she really? Will it affect French consumers, their daily lives, and their wallets? “The immediate impact is not as strong as the Covid-19 crisis and the 2008 financial crisis,” said Pierre Gylet of Nuance, an economist and researcher at the IRIS (International Institute for Strategic Relations) and Jacques Delors Institute.

We are not going to enter the wartime regime and experience a shortage. There is an impact, but it is slight.

Pierre JailEconomist and researcher

Little exports to Russia

As researchers remind us, Russia, a “small economy,” is not the central market for France. “This country accounts for only 1%, 1.5% of our exports. In this respect, French industry and agriculture will be relatively free.

However, there are concerns about the direct impact on consumer products.

“The main impact is About energy prices, Russia is an exporter of natural gas. France, which produces nuclear power, is less dependent on Russian gas than its neighbors in Europe. According to Eurostat, this represents 17% of imports (gas accounts for only 20% of energy consumption), much less than Germany (64%) and the Czech Republic (100%).

Market overreaction

However, because of the domino effect, we are essentially linked to the other member states of the European Union in the free movement of goods, so the increase in energy costs is more reflected in our products: manufacturers more in production. You have to spend, and therefore pass this rise on to the price.

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Another point, “Psychological aspects of this conflict and market tensions,” according to Pierre Jail.

This war is overreacting investors. They are afraid of shortages, and this fear affects prices. See it with that of the barrel soaring in the last few weeks.

Pierre Jail

In addition to the inflation associated with the economic recovery, this situation has had a very strong impact on fuels, which have set new records and continue to break records.

Russia and Ukraine account for 30% of wheat production

Is it possible to fear an increase in agricultural products and foods? “Russia and Ukraine are one of the largest grain producers in the world (30% between them),” economists show. Chain reactions can affect us from importing their products, but it’s hard to say how fast and to what extent. »»

Milling wheat has exploded in almost half since November 2021. It is currently sold in the European market for € 435 per ton. While this increase risks particularly disrupting exports and affecting livestock farmers, economists agree that the European Union will be much less affected.

In particular, the EU, one of the world’s largest trading powers, has the ability to manage itself at the agricultural level and does not require Russia or Ukraine for most of its products.

There is concern about the shortage of certain metals

“But this is not the case for certain metals such as aluminum, palladium, titanium and even nickel, where Russia is Europe’s major supplier. For now, manufacturers reserve but sanctions. If the conflict continues, we will be afraid of a shortage in the automobile and aviation fields … “

Aluminum also surpassed the $ 4000 bar per ton for the first time. Copper and palladium have reached historic highs.

“Economic Resilience Plan”

The French government has announced an “economic resilience plan” aimed at supporting the companies and sectors most affected by the crisis.

Prime Minister Jean Castex said on Thursday, March 3, that he would propose concrete solutions and assist them as needed. The meeting is scheduled for the next few days and will be attended by social partners.

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