Ukraine continues to influence the global economy
After what happened in Ukraine, it was possible that a post-pandemic spending spree would help devastated people rediscover normalcy after two miserable years. All this changed radically when Russia invaded Ukraine. A united West retaliated with devastating economic sanctions against Russia.
The world is experiencing significant economic stagnation. Increased government spending led to greater amounts of debt and strained public finances. At the same time, the pause in trade caused economic activity to half, causing businesses to grind to a halt and create deficits.
Citizens all over the world have experienced economic instability. The global economic crisis that followed the outbreak of the war was inevitable. The phrase economic crisis is now used by almost every country in the world.
Global growth is expected to fall from 3.5% in 2022 to 2.8% in 2023 before returning to 3.12 in 2024. Central bank rate hikes to combat inflation continue to impact the economic environment.
Experts anticipate worldwide inflation will decline from 8.7% in 2022 to 6.7% in 2023, 4.4% in 2024, and settle around 3.5%, which was the rate before the pandemic. The economic sanctions imposed on Russia significantly increased the prices of goods. As a result, both developed and developing countries will continue to face high inflation.
War in Ukraine triggered a global food supply shortage
The war in Ukraine reduced the global food supply, with 345 million people facing food insecurity in 2023. In addition, in January 2023, food prices increased by 14.12%.
World food prices eased slightly, with the UN Food and Agriculture Organization’s food price index retreating to 135.72 in November from 135.93 in October, well back from a peak of 159.72 in March but still well above the pre-war mark.
Last year, 222 million people endured extreme food insecurity and fragile environments worldwide. However, amid the conflict, consumer prices in developed countries advanced by 7.33% last year, higher than the January 2022 estimate of 3.92% and 9.92% in developing countries.
Growth in low-income countries is expected to reach 5.12% in 2023. Following the conflict in Ukraine, the slowdown in global commodity markets, particularly energy, has compounded cost-of-living pressures on low-income countries.
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