The Russian invasion of Ukraine is a war with centuries-old arguments that we never would have thought it could happen in the 21st century. As the former British Prime Minister said, Neville Chamberlain: “In a war there are no winners, everyone loses & rdquor ;. This is clear from the thousands of people who are dying, your family and friends; and the more than 10 million displaced people. In fact, most of the Ukrainians and Russians lose; and many people from other affected countries. If we analyze what is happening in more detail, we can see that the impacts on economic matters can be very diverse:
armament manufacturers
This is a sector benefited by the war. Many countries, like Germany, for example, have announced that they will substantially increase their spending on weapons. These companies win with the war and the increase in the stock market price of their shares is a good example. This does not benefit all investors, since in recent decades the number of investors who do not want to know anything about the companies that are in the war sector has been increasing. Banks and investment funds that have incorporated non-investment in arms companies into their policy are also growing.
Energy (oil, gas…)
as Russia is one of the world’s leading exporters, strong price increases are taking place that benefit energy and electricity companies; and they clearly harm many energy-intensive sectors (transport, steel, chemical, ceramics, paper, automotive, machinery, household appliances). As an example, we are seeing companies that stop their activities, since they cannot pay the electricity bill. Another example is that of universitieswho have reported that they turn off the heating because the energy cost has become prohibitive.
Cereals and mining
These are sectors in which Russia and Ukraine have a strong weight in world trade. are being produced export restrictions and boycotts; and significant price increases. It happens with wheat (Russia produces 26% of what is consumed in the world), barley, sunflower oil (Russia and Ukraine generate 50% of world production), feed, fertilizers, titanium, uranium, nickel, neon. .. These price increases may benefit producers and marketers, but harm many industries and consumers.
Inflation
The price increases of many products (energy, minerals, cereals…) are preventing the control of inflation, which was already very high before the war. At the moment, we are at rates that exceed 7%, which is a percentage that we have not seen for more than thirty years. This destabilizes the economy and impoverishes many people. This is the case of all those groups in which salaries do not increase in accordance with inflation. Given that the pension system already has serious viability problems, it is not easy for pensions to increase as much as inflation, which can make pensioners lose purchasing power.
Exporting sectors to Russia
Since they cannot now sell to their Russian customers, they lose income. It is the case of automobile or luxury productsfor example.
Tourism
As we will receive fewer Russian tourists, activity will be lost. Even so, the impact is limited, since Russian tourists represented 0.4% of the tourists who came to our country in 2021, with an expenditure that represented 0.7% of the total.
Russian oligarchs
They also lose, as their assets outside Russia are at risk and their activity is limited by boycotts.
Companies with subsidiaries in Russia
They are companies that are losing sales and seeing their investments in danger. This is the case of companies like Inditex, Mango, Borges, Fluidra… In most cases they have interrupted their activity and there is a risk that Russia will expropriate their subsidiaries.
The direct economic impact of all this is trade restrictions, price increases, more inflationary pressures, loss of purchasing power of many groups, company closures and more volatility in the markets. This is harming the economic recovery that was expected by 2022.
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In short, the Russian invasion of Ukraine brings pain, destruction, refugees, injuries, deaths… In the economic field, most of the sectors, as well as consumers, of many countries, especially European ones, are suffering significant losses . And as the war drags on, it will be more difficult to control inflation and get the economy back on its feet. Ultimately, even though someone wins, for most it is a disaster.