Economic Implication Russia VS Ukraine, Inflation and Sanctions After Effect

By Ellerd Vallery Luison Oentoro

A week passed, Russia and Ukraine tension escalated to war, the market jumped up and down due to the commodity and metals exported from both countries being put on halt.

Why is that? Please have a look key facts below:

  • 70% of land in Ukraine isΒ  farmland, which produces major grains and vegetable oil, such as wheat, corn, sunflower-seed oil, and barley. As well as one of the main exporter of wheat, corn, iron ore, seed oil, barley
  • Ukraine produces around 70% of global neon gas export, which crucial to semiconductor industry (Taiwan, USA, China), supplies around 90% of USA semiconductor grade neon
  • Russia similarly mainly exports Sunflower-seed oil, wheat, barley, linseed, corn and fertilizer.
INTERACTIVE-Ukraine-Russia-main-exports.png (770Γ—770) (aljazeera.com)

As the sanctions from other countries started to fall on Russia, which made the situation worse for the global economy, especially countries that depend on Russia and Ukraine export, mainly wheat, corn, iron ore, neon, crude oil and natural gas, which lead to higher prices. Higher price leads to higher inflation globally, would all central banks act to lower the inflation?

With major chip manufacturer countries such as Taiwan, USA and Taiwan supply of neon stopped from Ukraine, it leads to scarcity of chips, and further increase prices of electronic, mobile phones, and cars that used chips.

The sanction from several European Union countries can make Russia halt natural gas supply to those countries, causing the price to soar within this week. Crude oil supply as well trailing behind. With these factors and also higher energy prices, those will burden households and industries around Europe.

With the risk on mode, investors walk out the markets to avoid higher risk, please trade with caution as the geopolitical and economic are still uncertain.

Happy Trading.

Glori Kapital Indonesia

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