Kendra Onuorah analyses the bigger influences that generate rising inflation.
The impact of the Russian-Ukrainian war of 2022 on global businesses remains a prevailing issue in 2024. Industries producing a variety of goods and services spanning from agricultural commodities to energy continue to suffer significant revenue loss. The World Trade Organisation (WTO) has reported a decrease in trade growth from 4.7% to less than 3.4% in 2022. Although trade growth is projected to increase by 2.6%, the prevailing political tensions could limit trade rebound. Wheat producers in Ukraine have suffered a €1.3 billion loss in 2022 and continue to suffer loss as the agriculture sector is reported to have faced a staggering €3.2 billion euro decline in 2024.
As it relates to Irish businesses, the Russian-Ukrainian war has placed significant stress on energy prices. With Russia and Ukraine serving as crucial energy transit routes to Europe, the conflict has severely disrupted gas supplies, resulting in skyrocketing prices. Although Ireland does not import any oil directly from Russia, oil and gas flow disruption has affected energy prices within the international markets, and Ireland is not insulated from these impacts. In a report conducted in 2022 by Ireland's main electricity supplier, Electric Ireland, it was revealed that the immediate impacts of the conflict in Ukraine have raised residential energy costs by 23.4% for electricity and 37.5% for gas. However, Electric Ireland’s updates on gas and electric prices have been reported to have reduced since 2022 from £3.64 per therm to £0.75 per therm, pointing to a positive progress.
Oil and gas flow disruption has affected energy prices within the international markets.
Geopolitical uncertainty stemming from the conflict has also impacted investor sentiment. As estimated by The Central Bank of Ireland, uncertainty often leads to volatility in financial markets, and Irish businesses seeking investment or expansion may face tighter financing conditions. Foreign direct investment flows into Ireland could be affected by broader risk aversion in the aftermath of geopolitical tensions, potentially impacting the job market and economic growth.
Irish businesses seeking investment or expansion may face tighter financing conditions.
The war in Ukraine has had multifaceted impacts on the global and Irish economy, from energy prices to broader geopolitical uncertainties. Navigating these challenges will require proactive policy responses and adaptive strategies from businesses to ensure resilience in the face of evolving global dynamics.