Today Indonesia has announced a complete ban on cooking oil and its raw material exports from the end of April. this has sent cooking oil prices to another high. Ukraine also reported that due to the conflict thirty percent of fields have been sown.
This day also brings Russia announced the second phase of its military operation in Ukraine to capture most of the Eastern part of the country. On the other side, China is struggling to keep thee corvid cases in check and might see a demand shock as severe as during 2020.
Yes, all these have been news of the past twenty-four hours, and as it has been conveyed even by thee Federal Bank chairman yesterday that we will not return to the pre-pandemic economy.
These shocks are enough to imbalance a stable economy but in the times of rate hikes and large inflations, these shocks would result in a hard landing with a larger than anticipated recession.
But these would not be the only shocks as the further aggression by Russia would lead to further sanctions and post-French elections such a sanction package is to be announced that would include oil-related sanctions as well.
This would send another round of price premiums throughout the markets and would be enough to send central banks to another level of aggression to fight inflation as the coming summer will be a chaotic one.
The shortage of food is going to accelerate as the input cost makes sowing loss-making and this will result in a record-low harvest. The main shortage would be visible by winter and through next year.
The positive news can be on 9th may that Russia may declare thee military operation successful and pause for now. This would be a short-term relief but one needed.