Since 24th February 2022, nothing has been the same in the world because of the Russia – Ukraine war. The Russia-Ukraine War’s effect on the global economy seems to be severe. This war caused the western countries to unite against Russia and they all have started imposing sanctions on Russia immediately. Together with the sanctions, globally well-known brands are exiting the country one by one.
This critical act of global brands exiting the country has important impacts on Russia. Although many countries are bound to Russia in different sectors but especially in the energy sector, they are still boycotting the country without thinking about the results. Apple, Audi, BMW, Boeing, Coca-Cola, Dell, Ford, Netflix, Nike, Nestle, Renault are either exiting the country or closing their stores and stopping sales activities in the country. This action of global brands is being followed by many others day after day.
Russia has been working with the European countries in order to drill oil or natural gas in its lands. However, after the war has been declared, international companies have stopped their work in Russia. They do not care about their financial losses; they only do not want to be a part of this war no matter what the outcome will be. Russia is greatly reliant on other countries for highly valuable industries and technology-intensive fields.
Not only global brands are leaving the country, but also most of the Russian banks are being taken out of the international banking system; SWIFT. On the other hand, the USA blocked the Russian Central Bank’s access to $643 billion in foreign exchange reserves, which were stored in the US and European Central Banks. This amount is about half of the total. Borrowing of Russia’s wealth funds from international markets was stopped, too.
Although Turkey is not imposing sanctions against Russia at the moment if the war continues this may be inevitable. Turkey is now keeping the balance between Russia – Ukraine and European countries. If this war lasts longer the effects will be more severe both on Russia and Ukraine and also on other countries’ economies at the same time.
There are important results of these sanctions in negative terms. This is not only affecting the Russian people but also all the companies working with Russia are being affected. Paypal, an international payment system, stopped its activities in Russia and this is also ruining business relations between Russia and other countries.
The conflict between Russia and Ukraine will have a triple-negative effect on the World economy: financial sanctions, commodity prices, and supply chain disruptions. As the authorities state, the most problematic issue will be the increase in commodity prices. What’s more, oil, base metals, grains, and gas prices will also go up. Since Russia is one of the major producers of some important base metals such as titanium, nickel, palladium, and aluminum, their prices are also expected to increase. This increase will affect global industries, especially the automotive industry.
There will also be an increase in agricultural products’ prices because of the war. More than a quarter of world wheat is produced by Russia and Ukraine. At the same time, corn, barley, and rapeseed prices will increase. The Russia-Ukraine war’s effect on the global economy is felt more day after day.
On the other hand, according to the experts, Turkey and Romania will be a hub for companies who used to work with Russia and/or Ukraine and have to find new suppliers/producers/distributors, etc. Those companies will turn their faces to Turkey in order to find new business partners for themselves to continue their usual workflows. Following the pandemic and problems faced in the global supply chains, Turkey has become an ideal place to locate business activities for important global companies.