Isolated during the Cold War, Russia was once again suffered the same fate during the conflict that it triggered with Ukraine. Since Russia has a grand role in the worldproduction of energy, agricultural raw materials and metals, the exclusion of the country from global trade and finance due to suffocating western sanctions has created a gaping hole in the world economyaccording to data, experts.
Russia, which had no significant position in international trade during the period of the Soviet Union, was mainly trading with Eastern Europe at the time. However, the emergence of Mikhail Gorbachev as Soviet leader in 1985 opened the door to international markets for the country.
According to the data of the United Nations Conference on Trade and Development (UNCTAD), after the collapse of Soviet Union in 1991, Russia becomes one of top 25 trading countries in the worldaccounting for about 1% of global exports. Later, this share reaches about 3%.
At first, Russia’s main export destinations were Germany, the United States and Italy, which began trading Above all in oil and gas.
By 2002, the country had become a major supplier of wheat to foreign markets, accounting for almost 6% of global exports, according to the Observatory of Data on economic complexity.
When agriculture became a smaller part of US economic output, Russia has stepped up in. The United States held 17% of the international fertilizer market in 1995. Russia provided about 10% of this. While Russia took the lead after eight years, it became the leading exporter of wheat as of 2016.
According to World Bank data, by 2020, global trade counted for 46% of Gross domestic product (GDP) of Russia. More … than half of the country’s export revenue comes from oil and gas, with metal accounting for 11% of the total exports.
Another blow to global trade
After the war in Ukraine, the country trade took a new beat with the penalties imposed on Russia.
While countries such as the United States and the United Kingdom announced that they would stop buying Russian oil, companies and countries started to avoid Russian goods due to payment restrictions and difficulties.
Russian President Vladimir Putin also restrictions imposed on export of some products in retaliation in the West countries. The Kremlin announced last week that it would ban the export of certain agricultural, automotive and medical products until the end of the year.
Since Russia leads in the production of energy, agricultural commodities and metals, the ongoing war and daily increasing sanctions pushed commodity prices further up a trend that had already started with the COVID-19 pandemic.
Meanwhile, according to reports, Russia already has willing customers such as China, which is its main export destination, while India can buy oil and other domestic goods at reduced prices.
Moreover, it should be noted that countries which make up at least 35% of Russia global the markets have not yet imposed sanctions or severed economic relations. Despite this, some of these countries seem to have difficulty in transport goods from the Black Sea.
western countries’efforts to push Russia out of the global economy are also climbing a global struggle for alternative supplies of everything from gas to nickel and fertilizer.
Other raw material producers are also start benefiting from rise in prices. The Oxford Economics report revealed that more that a third of emerging markets enjoyed a 20% rise in export price since the beginning of this year.
Financial collapse
Peterson Institute of International Economics (PIIE) head Adam S. Posen said that the value of the ruble fell like a result of Western sanctions imposed on Russia.
Pointing out that Russia will have difficulties in Meet defense and consumer needs car he will be missed critical components, Posen said, “The reaction of the democrat world to Moscow’s aggression and war crimes is correct on both ethical and national security reasons. However, these actions are more important than economic efficiency. There are negative economic consequences that go far beyond Russia financial collapse.”
Noting that there have been trends which have eroded globalization in the last 20-year-old Posen said the Russian occupation and subsequent sanctions would worsen this erosion.
Posen noted that this will not stop many governments from retreating and trying to protect themselves by withdrawing from the global economy.
“The economic consequences for the world will be huge, and decision makers need to achieve and balance them as much as possible”Posen said.
