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LATEST NEWS UPDATES | India’s Foreign Trade during the Ukraine War -CP Chandrasekhar and Jayati Ghosh

India’s Foreign Trade during the Ukraine War -CP Chandrasekhar and Jayati Ghosh

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published Published on Dec 13, 2022   modified Modified on Dec 14, 2022

-Networkideas.org

The Russian invasion of Ukraine and the subsequent war sparked rapid and dramatic increases in some global trade prices, particularly for fuel products, wheat and fertilizer for which Russia and Ukraine are major exporters. It is now clear that these price changes were not due to actual changes in total supply, which remained largely unchanged (although source locations and trade routes shifted). Instead, market expectations amplified by media hype, financial speculation in commodity futures and simple profiteering by major fuel companies and agribusinesses, were probably the major factors. This is why these prices rose sharply from January until around June 2022, and then subsided, such that by late September, they were down to pre-Ukraine War levels.

Nevertheless, developing countries have suffered from those price rises, and not only because of the increase in the prices of these essential commodities that are universal intermediates entering into all other production and distribution costs directly or indirectly. There tends to be a ratchet effect of these prices within the developing world, as they stay high within their economies in the absence of countervailing measures by governments. The higher prices of what are essential imports for net oil-importing and food-importing countries also puts pressure on their trade balances. Meanwhile, the impact of the war and related sanctions on supply chains and disruption of trade routes can adversely affect exports.

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Networkideas.org, 13 December, 2022, https://www.networkideas.org/featured-articles/2022/12/ift-ukraine-war/


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