![]() ![]() ![]() While high commodity prices were one of the risks already identified as potentially disruptive to the recovery, the escalation of the conflict increases the likelihood that commodity prices will remain higher for much longer. Following the latest developments, Brent oil prices breached USD 100 per barrel for the first time since 2014 (125$/b at the time of writing), while Europe’s TTF gas prices surged at a record EUR 192 on 4 March. On the day the invasion began, financial markets around the world fell sharply, and the prices of oil, natural gas, metals and food commodities surged. On its side, Ukraine is a key producer of corn (6th largest), wheat (7th), sunflowers (1st), and is amongst the top ten producers for sugar beet, barley, soya and rapeseed. It is also the largest wheat exporter in the world (almost 20% of global trade). Russia is the world’s 3rd oil producer, the 2 nd natural gas producer and among the top 5 producers of steel, nickel and aluminum. The conflict threatens to squeeze energy and commodities markets further ![]() Together with a complete cut of Russian natural gas supply, this could cost at least 4 points of GDP, thereby leading EU GDP growth close to zero – more probably in negative territory – in 2022. European economies are most at risk: at the time of writing, Coface estimates at least 1.5 percentage point of additional inflation in 2022, while GDP growth could be lowered by 1 percentage point.Coface forecasts a deep recession of 7.5% for the Russian economy in 2022 and downgraded Russia’s risk assessment to D (very high).Certain sectors such as automotive, transport or chemicals are more likely to suffer.Higher commodity prices intensify the threat of long-lasting high inflation which increases the risks of stagflation and social unrest.Since our last publication, the world has shifted, so have the risks. The Russia-Ukraine conflict has triggered turmoil in the financial markets, and drastically increased uncertainty about the recovery of the global economy. ![]()
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