Macroscope | How sanctions on Russia risk mass destruction of the global economy

Name: How international sanctions imposed since Ukraine invasion are hitting Russia
Uploaded: 2022-03-06T07:30:14.000Z
Duration: 4 min 1 s
Description: How international sanctions imposed since Ukraine invasion are hitting Russia

Western sanctions threaten to worsen the supply chain, inflation and debt crises already threatening a vulnerable world economy. An obsession with punishing Russia could end up punishing us all

Reading Time:3 minutes

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Petrol prices in Santa Clarita, California, on January 28. Sanctions on Russia have sent energy prices skywards, worsening inflation. Photo: AP

Anthony Rowley

Published: 3:30pm, 6 Mar 2022

Things have been getting very hot on the war front with Russia’s invasion of Ukraine, Vladimir Putin’s hints about the nuclear option, Germany’s swing towards rearmament and even talk in Japan about nuclear weapons. All this has so far masked the growing danger of crises on the global economic front.

For the embattled leaders of Russia, China and the US, among others, these events are a distraction from having to deal with galloping inflation, soaring debt levels, rising interest rates and fiscal problems (not to mention Covid-19 and climate change).

The distraction will be temporary, however, because even if the Ukraine invasion stops short of becoming a full-out hot or cold war, the damage and mess accumulating in the global economy will engulf all players on the world stage.

It’s a sad reflection of the human condition and the lack of statesmanship that the world has shifted onto a war footing just when so many potential economic crises are looming. Unlike missiles raining from the sky, these threats will undermine economic foundations from below.

The biggest immediate threat is inflation and events are fuelling the fires. Economic sanctions are being hurled at Russia with impunity or even a kind of malicious glee. They have become the weapon of choice rather than boots-on-the-ground military intervention.

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How international sanctions imposed since Ukraine invasion are hitting Russia

Sanctions further damage supply chains already disrupted by trade wars, and they fuel inflation, especially for oil and gas prices – just what the world does not need. Oil prices, as analyst Jeffrey Halley at foreign exchange specialist Oanda said, were “on fire over Russian supply shocks”.

.css-1m2rp1p{color:#34b8b5;}Macroscope | How sanctions on Russia risk mass destruction of the global economy

Macroscope | How sanctions on Russia risk mass destruction of the global economy