A continuous series of crises
The impact of the war between the Russian Federation and Ukraine can be understood in the context of the crises that have affected the world economy in the last 15 years: the global financial crisis of 2008, the economic tensions between the United States and Europe, on the one hand, and China, on the other, and the coronavirus disease (COVID-19) pandemic ( ECLAC, 2022a).
„ These crises, by disrupting global value chains, have put pressure on manufacturing sectors, contrary to the globalization trend of previous decades. The slow growth of international trade and its small contribution to world growth in recent years is a clear sign of these changes (ECLAC, 2022a).
„ Crises led to disruptions in various primary and manufacturing production chains in economic sectors. Increased protectionism led to more trade barriers, while the disruption of the maritime transport system exposed the vulnerability of chains to external changes.
“While the pandemic has had the most severe impact of any event on logistics in recent decades, the war in Ukraine is characterized by its ability to disrupt commodity-based sectors. Due to the specialization of the warring countries in terms of production and trade, the conflict directly affects the trade and international prices of crude oil, natural gas, grains, fertilizers and metals. has done
„ Three of the four recent episodes of food price hikes occurred in the last fifteen years (2007-2008, 2010-2011 and mid-2020); Another took place in the 1970s. Monetary expansion played an important role in the 2007–2008 and 2010–2011 episodes, stemming from measures to alleviate the global financial crisis. Greater global liquidity and increased economy of markets contributed to increasing international prices of several food groups, as well as fueling their volatility (Van Braun et al., 2008; ECLAC/FAO/IICA, 2011).
„ More recently, disruptions in logistics and production processes caused by measures to address the COVID-19 pandemic have accelerated price increases. Although the relative importance of supply factors and demand factors is still debated, both are important in the current inflationary situation (ECLAC, 2022a).
„ The recent upward trend in international food prices in the mid-2020s was driven primarily by vegetable oils and grains. Pandemic-induced inflationary pressures are expected to remain volatile. However, the war in Ukraine has further disrupted key production chains such as energy and fertilizers. This will not only prevent inflation from returning to pre-pandemic levels, but also lead to a substantial acceleration of inflation in the first seven months of 2022.
„ In terms of food, the current inflationary cycle is more marked and prolonged than the price hikes of 2007-2008 and 2010-2011. The Food and Agriculture Organization of the United Nations (FAO) Food Price Index (FFPI), measured in real terms, rose by 64 points between June 2020 and March 2022, reaching an all-time high of 156.3 points in that month (see Figure 1) between March and October 2022. The index later fell by 23.3 points (14.9%), but remained above the peak levels of the past decades.