The Russian-Ukraine war is the greatest conventional military action since World War II, that inhabits the potential to destroy the global economy.
The ongoing Russia-Ukraine War had contributed a threat to the entire economy, limiting growth by raising prices at a time when they are already high. Ukraine is not a big commercial partner for any major economy, although China, the United States, Germany, France, and Italy are among Russia’s most important import partners. Many countries’ financial markets are in rapid decline, especially after Russia’s conquest of Ukraine on February 24, 2022, which thrust the world into a state of uncertainty, chaos, and geopolitical instability. The instability of global financial markets has resulted in irreversible capital losses for millions of investors who are disappointed and seeking to safeguard their investments. As another disaster shakes the world economy, growing global inflation, fears about liquidity shortages, and rising interest rates on the “US Federal Reserve Board” have already generated turbulence in global financial markets. Both Russia and Ukraine are major exporters of agricultural products, chemicals, and metals. Disruption in supplies has raised the cost of wheat, soybeans, and sunflower oil in world markets.
The impact of multiple sanctions on Russia is raising concerns about a redirection of foreign inflows from developing economies to western financial markets, which are dealing with the worst consequences of Russia’s invasion of Ukraine. When another man-made international war hit the earth, adding another dose of uncertainty to the rejuvenation, the unsettling impact of COVID-19 had not yet faded. The delinking of Swift messaging services for some of Russia’s largest banks is raising alarm among local business people as well as other economies with substantial trade relations with Russia, giving the sanctions a new dimension. Some of them are considering sending ruble payments to nations with greater linkages and natural trade inflows and outflows. With Visa and MasterCard suspending operations in Russia, cardholders who have a relationship with them would face enormous difficulties in terms of payment system compatibility.
Russia-Ukraine War -The Influence Effects on Indian Financial Markets
According to widely cited sources, the Russia-Ukraine issue has fueled global economic anxiety and will have an impact on oil and other commodities. Even though India does not have a major merchandise trade with Russia, it stands to lose profits because of supply disruptions imposed by Western sanctions.
India might suffer from a Russia-Ukraine war even if it is not a party to it under Russia’s oil export ban. Brent crude prices soared to over $130 per barrel in response to the United States’ ban on all oil and gas imports from Russia. Prices of edible oil have already skyrocketed and will impact domestic costs, and these costs will benefit mustard farmers. Although Russia is one of the world’s greatest crude oil exporters, this is a huge setback for global economic growth. Although oil imports from Russia account for barely 1% of India’s trade, there could be a spillover effect in the shape of high prices and slow growth as per the current scenario. Concerns about inflation are especially important because India imports up to 85% of its crude oil. International oil prices have risen to a 14-year high, resulting in broader pricing pressures. Higher cost-push inflation will have a significant influence on India’s economy, affecting all economic agents—households, enterprises, and the government.Now the Oil and Gas Price hike is the biggest issue in our country arises from the Russia-Ukraine War .
India’s Military Supplies Have a Major Role as:
India’s frequent crossbenchers from UN votes since the invasion of Ukraine are said to be influenced by the country’s instinct to preserve its supply of defence equipment, the majority of which comes from Russia. According to data from the “Stockholm International Peace Research Institute”, India accounted for over a quarter of Russia’s total weaponry shipments. This explains why defence spending accounts for a huge chunk of India’s annual budget. India earmarked $70.2 billion for military spending in its union budget for 2022-23, an increase of over 10% from the previous fiscal’s original allotment. The delivery of the $5 billion S-400 air missile system, built by Russia, is one of the most important military contracts in doubt.
The risks of Russia-Ukraine War are not limited to Ukraine and Russia in today’s increasingly linked globe; they have far-reaching consequences for other economies. In a war, there is no winner. In armed conflicts, the loss of life, livelihood, and property is certain, and the economic impacts will last for a long time, leaving people homeless and destitute. Covid19’s wrath is still doing havoc on us. World leaders should meet not to discuss the intensity of penalties, but to figure out how to settle the problem and put a stop to the chaos.