The chief of the World Bank has said that the war in Ukraine is a “economic catastrophe” for the world that will cut global economic growth. David Malpass told the BBC that the fighting comes “at a wrong time” because inflation is already rising.
Mr Malpass further said that economic impact of the war – rise in prices of oil and gas – “will hit the poor the most”.
The grim forecast comes at a time when oil prices are at its highest in more than seven years. The Brent crude – international benchmark for oil prices – is hovering above the $112 a barrel mark due to the Ukraine war.
Countries, which are part of the European Union (EU), are expected to be hit badly. About 39 per cent of the EU’s electricity comes from power stations that burn fossil fuels and Russia is the biggest source of that oil and gas.
Also, there are fears that Russian President Vladimir Putin could cut the supply of gas to Europe in response to the sanctions imposed by the West.
“Russia’s invasion of Ukraine means that fears over supply will remain front and centre,” Stephen Brennock of oil broker PVM told news agency Reuters.
Supply disruptions have hit global prices of wheat, soybean, fertiliser and metals like copper, steel and aluminum – raising worries about prices and economic recovery.
Will fuel prices be raised in India?
Reuters reported on Friday that prices of petrol and diesel are set to rise next week for the first time in more than four months as global crude prices soar after Russia’s invasion of Ukraine. The report is based on inputs from three government officials who spoke to the news agency.
State-run oil companies, which control the domestic market, have not raised prices since November 4, but are expected to do so after the crucial state assembly elections are over.
India is the world’s third-largest consumer of oil, behind the US and China. It consumes 5.5 million barrels every day.
Asia’s third-largest economy imports 80 per cent of its oil needs, but a minuscule part comes from Russia (only two per cent). But retail inflation and the war’s impact on prices of other imported raw material can hurt the pockets of the common man.