The global economy has been undergoing turbulent times over the last couple of years, spearheaded by the pandemic-induced slowdown in 2020 and the resulting supply chain disruptions wrought about by travel restrictions and lockdowns. While the pandemic has receded—facilitated by the invention, mass production, and distribution of vaccines in record time—a number of geopolitical challenges have disrupted economic recovery.
The advent of the Ukraine-Russia war has swiveled the global commodities market as a result of the sanctions imposed on Russia by the Western economies. Russia’s importance as a global supplier of fossil fuel (USD 211 billion), fertilizers (USD 12.5 billion), precious minerals (USD 31.6 billion), Iron & Steel (USD 28.9 billion), and cereals (USD 9.1 billion) has resulted in severe supply side shocks and skyrocketing commodities prices. While the commodity prices have receded over the last few months, mainly due to recessionary bouts across the European Union (EU) and the United States (US), prices have remained well above the pre-war level.
Another structural shift witnessed over the last few years has been the confrontational stance between China and the US; initially manifested in the form of a trade war. The latest impasse over the visit of a senior US elected official to Taiwan has led to an assertive response from China and the possibility of an armed conflict over Taiwan cannot be ruled out in the medium term. Economists are predicting a gradual reversal of trade liberalization as the geopolitical fault lines are increasingly becoming more pronounced, leading to de-globalization.
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