The National Economic and Development Authority (NEDA) is closely monitoring the impact of the Russia-Ukraine crisis on trade and prices of commodities such as food.
“Trade and commodity prices are likely affected and the magnitude depends on the extent of the conflict,” Karl Kendrick Chua, NEDA secretary, told Malaya Business Insight yesterday.
Asked what specific commodities the government is monitoring aside from oil, Chua mentioned food.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said in an email that supplies of some global commodities from Russia such as oil, natural gas and metals, and from Ukraine such as grains could be disrupted by the war and by the sanctions on Russia.
This could thereby reduce the supply of global commodities from these two countries and add to the disruptions in the global supply chains.
“Elevated prices of oil/energy and other global commodities after Russia’s war with Ukraine could slow down economic recovery prospects amid higher inflation/prices of… affected products and services in terms of lower disposable income for consumers and businesses amid the need to pay more for imported oil/energy and other global commodities imported by the country,” Ricafort said.
“The Russia-Ukraine war and increased sanctions on Russia could also reduce global trade and thus slow down global economic recovery prospects. The immediate impact, as may have already been priced in by the financial markets, has been the increase in the global oil/energy prices since Russia is a major global oil/energy producer and Russia is among the biggest suppliers of natural gas for some European countries,” he added.
Ricafort said less dependence on imported oil/energy could be possible through the shift to renewable power sources such as solar, wind, hydro, among others.
“Conservation measures to reduce reliance on important oil/energy would also help mitigate the adverse effects on inflation and on economic recovery prospects,” Ricafort said.
