The world economy is anticipated to see its strongest post-recession rebound in 80 years in 2021, one year and a half after the COVID-19 pandemic started. The recovery, however, is anticipated to be uneven across nations as many developing economies lag behind major economies in terms of growth. David Rewcastle, a research analyst in Darien, CT with 35 years of experience, explained that it’s not just the U.S. experiencing higher energy prices. He said Europe is getting walloped even worse by the rising costs.
What will be the effect of foreign wars on the global economy? What will climate change bring about in the next decade? What will this all mean for the global economy and society?
“The global recovery from the pandemic would continue in 2022 and 2023, aided by progress with global vaccination efforts, supportive macro-economic policies in the main economies, and favorable financial conditions, prior to Russia’s war of aggression against Ukraine.” Rewcastle stated.
However, just as some of the supply-chain issues seemed to be receding, Russia’s conflict against Ukraine is impeding global growth and escalating inflationary pressures, generating a fresh negative supply shock for the global economy.
Russia-Ukraine War impacts on Economy
Research by consumer outreach firm SurveyNow said that the Russia-Ukraine conflict is having a significant impact on global supply chains. It has impeded the flow of goods, causing dramatic price increases and product shortages, and creating food shortages all over the globe.
These ripple effects threaten the supply of key food resources such as wheat, and raise the possibility for a global famine.
“Supply chain managers must think carefully about the opportunities and risk when searching for new sources, while also considering how to coordinate the changes from one source or mode,” stated David Rewcastle. It could cause all sorts of bullwhip effects in global supply chains if it’s not coordinated well.
“Europe is facing a perfect storm,” Rewcastle said.
Climate Change Impacts on Global Economy
Businesses will be affected by climate change and its effects around the world in many ways. Extreme weather can disrupt transportation and cause damage to factories and supply chains. Drought can make water more costly, which could impact the price of raw materials as well as production. Companies may have to cope with climate volatility, such as changes in the cost of production, energy transport, and insurance. Some products may become obsolete or lose market share, like equipment that is related to coal mining, and equipment for skiing in areas with no snow.
David Rewcastle believes that if countries can keep global average temperature rises below two degrees Celsius above preindustrial levels, then economic losses would be minimal by midcentury. This is the goal of the 2015 Paris agreement, which includes nations to combat climate change. According to David Rewcastle, most countries would have economies that are no more than 5 per cent smaller than they would otherwise be.