Russia-Ukraine war impact on Asian economies

Highlights

• The day Russia invaded Ukraine, stock prices in Asian countries experienced a steep fall.
• Russia is amongst the largest oil and natural gas producer, and the majority of the Asian nations depend upon the country for energy.
• Apart from energy, Russia and in fact, Ukraine is of utmost significance for the supply of wheat and corn.
• If tensions between the two nations increase, Asian nations may get into a deeper pit of high inflation, fiscal deficit, and inefficient balance of payment.

It is no mystery that the less advantaged ones bear the consequences of mis happenings to a higher degree. The emerging economies have to bear the worst of the consequences, whether the pandemic, higher inflation, debt crisis, climate change, or geopolitical and social conflicts.

As the Russia-Ukraine war escalated, with Russian troops moving deeper into Ukraine, things have started taking a steep turn for the Asian economies. Russia is hardly listening to the western allies. With Ukraine’s efforts for peace talks, the conflict between the two nations expounds significantly.

Many are predicting that this can turn into a cold war or, in fact, a war across Europe. However, these are mere predictions at the moment. But, whatever happens, Asian nations are going to incur losses if things don’t settle down. Let’s see how!

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How the Russia-Ukraine war impacts the Asian economies?

The ongoing conflict between Russia and Ukraine has already started showing massive losses for the Asian economies. The day Russia invaded Ukraine, the stock prices in the Asian countries experienced a steep fall. Most Asian countries are emerging economies, and these economies heavily import oil, wheat, and corn from Russia.

The toll on limited oil supply: The already disturbed supply chain is further hampered by the ongoing clash. Russia is amongst the largest oil and natural gas producer, and the majority of the Asian nations depend upon the country for energy. Thus, any hindrance in oil and gas supply would raise the energy prices to a higher level in these countries.

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Food prices: Apart from energy, Russia and in fact, Ukraine is of utmost significance for the supply of wheat and corn. The two countries are responsible for around 29% of global wheat exports and 19% corn exports.

What Does Russia-Ukraine Conflict Mean For World Economy?

The vicious cycle of higher inflation: Due to the high dependency of Asian nations towards Russia and, to an extent, on Ukraine also would cause high inflation levels due to disruptions in energy and food supply. The Asian countries are already under the pit of deteriorating fiscal balances because of the pandemic and now the war-induced inflation would shrink the economic growth of Asian countries.

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If tensions between the two nations increase, the Asian nations may get into a deeper pit of high inflation, fiscal deficit, and inefficient balance of payment. On the other hand, if the talks between the two nations happen peacefully, it would be a saviour for the Asian economies.