Zürcher Nachrichten - War and inflation threaten world economy

EUR -
AED 4.174366
AFN 81.263391
ALL 98.992593
AMD 443.605618
ANG 2.04828
AOA 1042.731791
ARS 1327.399657
AUD 1.775766
AWG 2.045677
AZN 1.936541
BAM 1.957242
BBD 2.294621
BDT 138.077825
BGN 1.955089
BHD 0.428323
BIF 3332.181304
BMD 1.136487
BND 1.493728
BOB 7.85289
BRL 6.464005
BSD 1.136452
BTN 97.010768
BWP 15.66475
BYN 3.71886
BYR 22275.154691
BZD 2.282812
CAD 1.577275
CDF 3269.674903
CHF 0.940675
CLF 0.027689
CLP 1062.559423
CNY 8.282385
CNH 8.28367
COP 4799.329822
CRC 575.231484
CUC 1.136487
CUP 30.116918
CVE 110.584658
CZK 24.977386
DJF 201.977003
DKK 7.465932
DOP 67.110032
DZD 150.630497
EGP 57.867447
ERN 17.047312
ETB 148.997912
FJD 2.566701
FKP 0.854259
GBP 0.853603
GEL 3.11442
GGP 0.854259
GHS 17.400067
GIP 0.854259
GMD 81.827503
GNF 9836.29958
GTQ 8.752565
GYD 237.760437
HKD 8.816132
HNL 29.325739
HRK 7.53628
HTG 148.395882
HUF 405.681013
IDR 19097.649334
ILS 4.118665
IMP 0.854259
INR 97.039382
IQD 1488.798604
IRR 47846.123487
ISK 145.334458
JEP 0.854259
JMD 179.852534
JOD 0.805888
JPY 163.284884
KES 147.179449
KGS 99.386267
KHR 4564.134135
KMF 491.535149
KPW 1022.802499
KRW 1634.678573
KWD 0.348618
KYD 0.94701
KZT 585.178945
LAK 24576.542243
LBP 101685.195801
LKR 340.524455
LRD 227.290492
LSL 21.223948
LTL 3.355753
LVL 0.68745
LYD 6.210949
MAD 10.518236
MDL 19.614713
MGA 5128.404041
MKD 61.557092
MMK 2386.049405
MNT 4031.910014
MOP 9.079811
MRU 44.982605
MUR 51.517408
MVR 17.513702
MWK 1970.595492
MXN 22.169693
MYR 4.97104
MZN 72.73559
NAD 21.230015
NGN 1828.699709
NIO 41.82137
NOK 11.862888
NPR 155.214696
NZD 1.905899
OMR 0.437538
PAB 1.136452
PEN 4.170345
PGK 4.606228
PHP 63.921782
PKR 319.296584
PLN 4.271432
PYG 9090.338785
QAR 4.137995
RON 4.979297
RSD 103.32159
RUB 93.824616
RWF 1609.266278
SAR 4.263349
SBD 9.494571
SCR 16.156575
SDG 682.464912
SEK 11.005863
SGD 1.493122
SHP 0.893101
SLE 25.802433
SLL 23831.555846
SOS 649.506759
SRD 41.914838
STD 23522.996365
SVC 9.942933
SYP 14776.390786
SZL 21.230006
THB 38.129575
TJS 12.023625
TMT 3.989071
TND 3.40496
TOP 2.661772
TRY 43.665899
TTD 7.719791
TWD 36.993847
TZS 3057.151713
UAH 47.526659
UGX 4165.904928
USD 1.136487
UYU 47.4435
UZS 14717.513301
VES 94.682955
VND 29573.109071
VUV 137.963623
WST 3.161504
XAF 656.455186
XAG 0.034347
XAU 0.000343
XCD 3.071415
XDR 0.817085
XOF 654.052633
XPF 119.331742
YER 278.557163
ZAR 21.239281
ZMK 10229.755219
ZMW 31.734804
ZWL 365.948506
  • RBGPF

    -0.2600

    63.19

    -0.41%

  • JRI

    0.1400

    12.74

    +1.1%

  • CMSC

    0.0000

    22.33

    -0%

  • SCS

    -0.0600

    9.89

    -0.61%

  • BCC

    -0.5800

    95.51

    -0.61%

  • NGG

    -0.2200

    72.04

    -0.31%

  • BTI

    -0.4000

    42.05

    -0.95%

  • RIO

    -1.1300

    60.56

    -1.87%

  • GSK

    -0.0700

    37.43

    -0.19%

  • BP

    0.1900

    29.19

    +0.65%

  • RELX

    0.3800

    53.55

    +0.71%

  • AZN

    0.0200

    69.57

    +0.03%

  • CMSD

    0.0100

    22.46

    +0.04%

  • RYCEF

    0.3100

    10.15

    +3.05%

  • BCE

    -0.3600

    21.65

    -1.66%

  • VOD

    0.0400

    9.35

    +0.43%

War and inflation threaten world economy
War and inflation threaten world economy

War and inflation threaten world economy

The world economy's fragile recovery from the Covid-induced crisis is now threatened by Russia's war in Ukraine and soaring commodity prices.

Text size:

Here are four questions regarding the risks to global GDP:

- Will growth stall? -

"The war happened right at a time when Europe and the US had a recovery that was going really well. Projections in Europe were among the highest ... (in) the last 20 years," said Jacob Kirkegaard, resident senior fellow with the German Marshall Fund of the United States in their Brussels office.

In just two weeks, the war has had a "material impact" on the economy, European Central Bank chief Christine Lagarde said Thursday, revising the growth outlook for the eurozone to 3.7 percent for 2022, from 4.2 percent forecast in December.

The war and sanctions, which include a US ban on Russian oil imports, are raising prices of energy and other key commodities like wheat, fertilisers and metals to surge, International Monetary Fund chief Kristalina Georgieva said.

That comes "on top of already high inflation," Georgieva said.

"We got through a crisis like no other with the pandemic. We are now in an even more shocking territory."

Credit rating agency S&P has cut its projection for global growth this year to 3.4 percent -- a decline of 0.7 percentage points over its earlier forecast due to the expected slump in Russia's sanctions-hit economy and rising energy costs.

Moreover, the cost of hosting Ukrainian refugees and budgetary aid will cost the European Union 175 billion euros ($192 billion), economist Jean-Pisani Ferry from the Paris-based Bruegel Institute think-tank said.

"I don't think that global economy will go into a recession," said Kirkegaard.

But he warned of the threat from stagflation -- persistently high inflation combined with high unemployment and stagnant demand.

- Why are prices soaring? -

Inflation has been rising worldwide for a year -- due to Covid-linked disruptions in supply chains, leading to a spurt in the prices of raw materials which have raised production costs.

The war has sent oil and gas prices soaring, threatening to worsen inflationary pressure.

Federal Reserve Chair Jerome Powell told the US Congress that every $10 hike in oil prices would impact growth by 0.1 percentage points and add 0.2 percentage points to inflation.

The United States recorded 7.9 percent inflation in February -- a new 40-year high.

"We are facing an oil shock, a gas shock and an electricity shock. This has never happened together," said Thomas Pellerin-Carlin, director the Jacques Delors energy institute.

Apart from oil and gas, other key commodities have been affected, with prices of aluminium, nickel and wheat skyrocketing.

Russian President Vladimir Putin on Thursday warned of inflationary pressures worldwide as a result of the Western sanctions on his country.

Several key industries have already been hit, with several steel plants in Spain shutting down due to high energy prices.

Millions of households are finding it more expensive to travel, heat their homes and bring food to the table.

"The price of bread went up enormously" since the war began, said Omar Azzam, a Cairo resident, referring to a 50 percent hike in a country which is the world's top wheat importer.

- More stimulus on the way? -

Nations launched huge stimulus programmes to prevent their economies from crumbling after the pandemic emerged in 2020.

But government are loath to dig much deeper into public finances.

Aid will likely be more targeted. The G7 group of industrialised nations, for instance has called for massive support to households slammed by energy costs.

Emerging nations, however, will be more fragile and vulnerable to inflation and even political instability, experts warn.

- Is Covid still a threat? -

While many countries are easing Covid restrictions, China has been doing the opposite.

The world's second biggest economy on Friday locked down Changchun, a city of nine million people, to control a fresh wave of coronavirus.

If such measures continue, they will hit the world hard, warned Kirkegaard.

"The Chinese economy will slow dramatically, China will shut down whatever they need to shut down," he said.

"It is as big and unknown as the war in Ukraine because unlike Europe and the US that are able to live with Covid, it is certainly not the case in China," he said.

O.Pereira--NZN