The war in Ukraine is threatening further disruption to already stretched supply chains. Ukraine and Russia may only account for a small proportion of the imports of major manufacturing nations like Germany and the US, but they are essential suppliers of raw materials and energy for many crucial supply chains.
Though the economic consequences of a war that threatens the lives and livelihoods of many Ukrainians will always be secondary to the looming humanitarian crisis, here are five areas likely to see trouble ahead:
Many European countries are heavily dependent on Russian energy, particularly gas through several vital pipelines, and this may have coloured their approach to the crisis. Russian gas reliance has been suggested as the reason Europe has been reluctant to remove Russia from the international payments system SWIFT, for example, though it’s worth pointing out that the Germans have indefinitely suspended new Baltic gas pipeline Nord Stream 2.
While a complete suspension of Russian gas flows is unlikely at the moment, even small disruptions will have a significant impact. Global gas reserves are low due to the pandemic and energy prices are already rising sharply, impacting consumers and industry.
Natural gas price (UK spot, pence per therm unit of heat energy)