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A Year Later, War in Ukraine Still Affects World Economy
One year after Russia invaded Ukraine, the worldwide economy is still feeling the effects.
There are fewer supplies of grain, fertilizer and energy. There is also higher inflation and more economic uncertainty.
But as bad as the war's impact has been, it could have been worse. Companies and countries in the developed world have been able to survive the difficulties. In developing economies, however, the pain has been worse.
In the United States and other wealthy countries, there has been a rise in consumer prices, caused in part by the war’s effect on oil prices. But the price increase has eased. It has raised hopes that the U.S. Federal Reserve will not raise interest rates in the world’s largest economy. Higher interest rates could lead to a recession.
China also dropped its severe zero-COVID restrictions late last year. The restrictions had slowed growth in the second-largest economy.
Some good luck has helped, too. A warm winter has helped lower natural gas prices and limit the damage from an energy crisis, after Russia largely cut off gas to Europe.
But in ways big and small, the war is causing pain. In Europe, for example, natural gas prices are still three times higher than they were before Russia began its invasion.
High food prices are especially difficult for the poor. The war has affected wheat, barley and cooking oil exports from Ukraine and Russia. The two countries are major suppliers for Africa, the Middle East and parts of Asia where many struggle with hunger. Russia was also the top supplier of fertilizer.
In Nigeria, a top importer of Russian wheat, average food prices increased 37 percent last year. Bread prices have doubled in some places because of wheat shortages.
“People have huge decisions to make,” said Alexander Verhes. He runs Life Flour Mill Limited in Nigeria’s southern Delta state. He added, "What food do they buy? Do they spend it on food? Schooling? Medication?”
Farmer Jose Francisco Sanchez drives a tractor spraying fertilizer on a barley crop in Anchuelo on the outskirts of Madrid, Spain, Tuesday, Feb. 7, 2023. (AP Photo/Paul White)
At least 40 percent of bread bakeries in the Nigerian capital of Abuja shut down after the price of flour jumped about 200 percent.
In Spain, the government is spending 300 million euros to help farmers buy fertilizer. The price of fertilizer has doubled since Russia’s war in Ukraine.
“Fertilizer is vital because the land needs food,’’ said Jose Sanchez. He is a farmer in the village of Anchuelo, east of Madrid.
It all means a slowing world economy. The International Monetary Fund (IMF) dropped growth expectations this year.
The IMF says prices increased 7.3 percent in the wealthiest countries last year. That was above its January 2022 prediction of 3.9 percent. Prices increased 9.9 percent in poorer countries, up from 5.9 percent expected pre-invasion.
In Indonesia’s capital, Jakarta, many street food sellers know they cannot make people pay more money. So some are giving smaller portions instead, in a practice known as “shrinkflation.’’
“One kilogram of rice was for eight portions ... but now we made it 10 portions," said Mukroni who runs a food stand. People, he said, “will not come to the shop" if prices are too high.
“We hope for peace," he said, “because, after all, no one will win or lose, because everyone will be a victim.’’
I’m Dan Novak.
Dan Novak adapted this story for VOA Learning English based on reporting by The Associated Press.
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Words in This Story
fertilizer — n. a substance that is added to soil to help the growth of plants
consumer — n. a person who buys goods and services
interest — n. the money paid by a borrower for the use of borrowed money
bakery — n. a place where bread, cakes, cookies, and other baked foods are made or sold
vital — adj. extremely important
portion — n. the amount of food that is served to a person at one time