Think Tank: Prices likely to adjust to Russia-Ukraine conflict

The global economy relatively regained its positive indicators in the second half of 2022, after the COVID-19 crisis and the beginning of the Russian-Ukrainian conflict according to a recent report by the Policy Center for the New South.

With expectations of price stability in 2023, the think tank says that “the outbreak of the war in Ukraine certainly led to a sharp rise in many basic products due to the weight of Russia, Ukraine and even Belarus in global production.”

“However, the imposition or non-imposition of trade and financial sanctions on Russian exporting companies as well as the implementation of retaliatory measures by Moscow mainly determined the upward or downward trajectory of prices.”

The Policy Center for the New South noted that “it is not surprising that the war in Ukraine and the ensuing economic and financial sanctions turned into a major supply shock in global commodity markets.”

“Despite their stability at high levels, grain prices generally contracted during the second half of 2022, on the back of favorable – even record – crops in a number of producing countries. However, the effects of global warming seem to be more significant each year and it is hoped that they will not be felt in 2023.”

According to the report, “the war in Ukraine and the rise in gas prices that it caused led to thwarting the effects on the energy transition; This added to the urgent need to increase the use of low-carbon energies with the re-legitimization.”

The report concluded: “More than ever before, international climate conferences must be accompanied by large-scale commodity negotiations. Energy and food security must be the goal of this, particularly for the benefit of countries most vulnerable to the effects of climate change.”

Since “conflict between Russia and Ukraine is likely to continue, these same variables will largely determine the shape of markets in 2023,” said the Policy Center for the New South.