On Monday, Moscow declared the independence of two Ukrainian breakaway regions and dispatched soldiers to the region, heightening the risk of a catastrophic conflict. President Joe Biden has already imposed sanctions on the rebel territories of Donetsk and Luhansk, preventing US individuals from exporting, importing, or making new investments in these areas.
Despite its size and raw material wealth, Russia’s economy is more comparable to Brazil than to Germany, France, or the United Kingdom, the World Bank’s latest nominal GDP figures revealed. According to the World Bank, Russia’s economy is weaker than that of Italy and South Korea, two countries with populations less than half that of Russia.
According to Jason Furman, a Harvard economist and senior adviser to former President Barack Obama, Russia’s economy is “very inconsequential in the global economy save for oil and gas.”
He described it as “essentially a gigantic gas station.”
His remarks come as the West prepared to slap Russia with harsh sanctions if it invades Ukraine. While these measures have the potential to throw the Russian economy into disarray, they also have the ability to wreak havoc on the US, Europe, and the rest of the globe as they battle inflation and rising oil prices — a ripple effect that the West seeks to avoid.
Ukraine, on the other hand, has been a big grain exporter to other regions, sending 40 percent of its wheat and corn exports to the Middle East and Africa, according to The New York Times. US Secretary of Agriculture Tom Vilsack stated on Saturday that American farmers would expand production and “step in and help our partners” in response to a potential food crisis in those countries.
Ukraine sells 12 percent of the world’s grain and is expected to provide 16 percent of global corn exports this year. According to Vilsack, American consumers would be mostly unaffected, but European consumers may confront “a different tale.”
The Times quoted Gregory Daco, chief economist at consulting firm EY-Parthenon, as saying, “You have to look at the backdrop against which this is occurring.” “Inflation is high, supply chains are tight, and there is uncertainty about what central banks will do and how persistent price rises will be.”
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