RUSSIA-UKRAINE WAR: IMPACT ON THE GLOBAL ECONOMY

As Russia officially invaded Ukraine via land, sea, and air, the crisis has entered a phase
that every nation in the world wanted to avoid. Despite several weeks of backdoor diplomacy,
the decision to finally invade the former member of the Soviet Union was decided upon by
Russian President, Vladimir Putin. This escalating tensions between Russia and Ukraine
inevitably contribute to rising prices for commodities such as oil, wheat, and fertilizers, which
negatively affects the global economy that is already experiencing decades of high inflation.

First on the list of the major effects on the global economy is the increase in oil prices.
With almost the entire country at Alert Level 2 and a move to Alert Level 1 becoming more
imminent, there will be increased movement by people and businesses, which is supposed to be a
good sign for the economy. Unfortunately, this coincides with a sharp increase in world oil prices
to about $100 per barrel and this will eventually lead to increased inflation. Oil, being a
commodity and driver of most price-sensitive consumables, will certainly drive overall prices to
go up. Having just enjoyed a lower Q4 2021 inflation rate, expect upward adjustments in certain
everyday products and services.

Moreover, prices of stocks will also retreat. As uncertainty over the crisis will adversely
affect the price of oil, increase inflation, and stymie logistics, local equities will be affected. In
the past 2 days, from a high of 7,440, the PSEi dropped to 7,240. Those with medium to long-
term horizons may not have to act on this yet, but it hits those who are targeting short-term gains.

In as much as this event affects us financially, a prolonged war does so much more on a
global scale. Let us pray that even with military operations underway, backdoor negotiations and
diplomacy continue to deescalate the situation. These are certainly trying times.

RESOURCES:

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  https://www.bworldonline.com/russia-ukraine-crisis-may-derail-phl-recovery/?
fbclid=IwAR3Y4L3T8ukmz9fIrrnat-MPQ8uoV0Pquq6zDJpUdexXCZqN7Po3jsgClHg
 https://www.marketwatch.com/investing/index/psei?countrycode=ph&fbclid=IwAR0F0c-
Lms5U69FWzN-hNSYy2JoELOTwejLxcaaN1JKmtmEtahqA2i8b6F0
 https://markets.businessinsider.com/commodities/oil-price?type=wti&fbclid=IwAR1jZ-
0itWJYYe89H83Q741b4SPMhklBTxhBudKA_P4L2hJJy5Wz5_LMSQI

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