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Economic Damage of The War

On 24th February 2022, Russia started a large-scale military operation in Ukraine. This resulted in not only geopolitical issues but also economic issues immediately. The first of them was that the financial markets reacted to large volatile moves in all segments as Russia is one of the largest commodity producers.

The next impact is due to a series of sanctions that have been applied by the Western World resulting in squeezing the liquidity available to the economy. And third is the anticipation impact, many businesses and financial institutions are halting regular business related to Russia in anticipation of further escalation and sanctions.

All these factors have created large shockwaves throughout the world as the threat level to global growth and higher inflation go up by many levels.

Though currently, talks of an agreement have started how positive they will be it is anyone's guess. Meanwhile, the Ruble is already 18% down against the dollar and Crude oil is hovering around $100/Bbl.

The reversal from all these moves will be impossible in the short or medium-term as the risk of further escalation or removal of facilities and products due to sanctions will lead to a readjustment in already a complicated and fragile economy.

Thus, the next ten months of 2022 will surely have enough volatility in them to keep investors and traders glued to the screen. But in all this, a positive reaction has come that all the rate hike odds have dropped drastically in a very short period but will central banks follow the path that has to be seen.


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