Economic Affairs

The economic shocks of war

A combination of war and soaring prices could take us back to stagflation.

In the wake of Russia's invasion of Ukraine, shortages of essentials have emerged and can only get worse as the war drags on. PHOTO: EPA-EFE
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Oil, gas, grains and base metals. The Russian war on Ukraine impacts them all at the same time. They touch every area of an economy, which means disruptions in their production, supply or distribution can have a devastating impact on countries everywhere, leading to sharp increases in the prices for just about everything. In the wake of Russia's invasion of Ukraine, shortages of all of these essentials have emerged and can only get worse as the war drags on.

The shortages stem not only from the war and its direct impact on production, infrastructure, and trade and transit routes, but also the reaction to the war, in the form of economic sanctions by governments and the voluntary actions of companies, including self-sanctions.

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