The IMF has prepared a World Economic Outlook report which will revise downward growth projections for most countries, because of the Russian invasion of Ukraine. Though the conflict itself is, at least for now, limited to these two countries, the importance of both as commodity producers has created a global impact. The export of oil and natural gas by Russia, and its transport across Ukraine, has meant that global prices have spiked, with the result that oil-importing countries, especially in the Third World, have been negatively affected. That is not all, for Russia and Ukraine are among the world’s biggest producers of wheat, providing 30 percent of the world’s exports, and the world price is now at record heights. This is a threat to food security in the Third World.
While Pakistan is suffering from the impact of these two, it will not suffer so heavily from other effects, such as a fall in remittances or disrupted supply chains or tourism. However, as the impact of higher oil and wheat prices is coming hot on the heels of the dislocations caused by the covid-19 pandemic, Pakistan is hurting all that much harder.
The world has not yet descended into a world war, and though the Ukrainians are suffering greatly, the damage is limited. Unlike World War II, when there were casualties all over the world. However, one of the results of globalization has been that the entire world is disrupted by a limited dislocation. The economic impact of this conflict does seem like that of a world war. A lot of the impact has been because of sanctions by countries supporting Ukraine, especially the USA. Those sanctions, especially financial, have disrupted the commerce of the globe, because the financial superpower has sanctioned a major commodity producer. The Western countries must concert measures to prevent human suffering that will inevitably take place, not because of the conflict, but because of the disruption generated by it. Such an effort will mean all parties have to soften hardened positions, and will have to involve economic players, not just conflicting parties. It is not just Russia and Ukraine that must be involved, but the USA and China as well.
