Economics of war: Pain for Europe now, later for Russia

Across EuropeSigns ofAs distress grows, so does the need for help Russia’s war in UkraineIt drags on. FoodBanks ItalyYou are providing more food for people. GermanAs they plan to ration natural gases and restart coal plants, officials turn down the air conditioning.

A huge utility is asking forThere may be more to come. DairiesI wonder how they will pasteurize the milk. TheThe euro has dropped to a 20 year low against the U.S. dollars, and recession forecasts are on the rise.

ThosePressure points are signs ofHow conflict-related — and how it can be resolved KremlinThe gradual extinction of natural gas, which keeps industry humming, has led to an energy crisis EuropeAnd raised the likelihood ofA plunge back into recession as the economy was recovering from the COVID-19 pandemic.

MeanwhileThe war has a high cost of energy, and this is a huge benefit. Russiaa major oil and gas exporter with a flexible central bank and many years ofLiving with sanctions has helped stabilize the ruble and inflation, despite economic isolation.

InHowever, economists predict that the long-term is not as important. RussiaWhile it is unlikely that the economy will collapse completely, it will still be costly. forThe war: Economic stagnation and loss of investment, resulting in lower incomes and deeper economic stagnation forIts people.

Europe’sThe most urgent challenge is short-term: fight record inflation of8.6% to get through winter without suffering from energy scarcity. TheContinent depends on RussianHigher energy prices and natural gas are driving up the cost of natural gas and fuel costs.

UncertaintyIt has a negative impact on energy-intensive industries, like steel and agriculture. These could face natural gas restriction to protect their homes in the event of a worsening crisis.

Molkerei Berchtesgadener Land, a large dairy cooperative in the Germantown of Piding outside MunichHe has stored 200,000 litres (44,000 Gallons) ofSo it can continue producing power and steam, fuel oil forPasteurizing milk and keeping it chilled if the electricity or natural gas to the turbine generator is lost.

It’sThis is a crucial safeguard for1,800 members farmers, whose 50,000 cows yield a million litres ofMilk once a day DairyMilking cows daily is essential. A shutdown could cause the ocean to stop flowing. ofMilk with no place to go

“If the dairy doesn’t function, then the farmers can’t either,” managing director Bernhard Pointner said. “Then the farmers would have to discard their milk.”

InOne hour later, the dairy uses the equivalent ofA year’s worth of electricity forA home that can hold up to 20,000 pallets ofGet milk cold

TheDairy also keeps stockpiled packaging and other supplies in case of an energy shortage. “We have a lot stored … but that will only last a few weeks.”

TheThe dinner table also faces economic problems. Consumer groups estimate a typical ItalianFamily spends 681 euros (U.S. Dollars) more each year to feed itself.

“We’re really concerned about the situation and the continuous increase in the number of families we’re supporting,” said Dario Boggio MarzetPresident ofThe Food Bank of LombardyThe following groups include dozens of people: ofCharities that provide food and shelter to the poor. TheirThe monthly cost of living is up by 5,000 Euros this year.

Jessica Lobli, a single mother ofTwo of the ParisSuburb of GennevilliersSurging grocery prices are closely monitored by. She’sHer consumption was reduced ofMilk and yogurt, renounced NutellaCookies that are branded.

“The situation will worsen, but we need to eat in order to survive,” said LobliThe average monthly salary for a cook in a school kitchen is between 1,300 to 2,000 euros.

HerMonthly food budget of150-200 Euros dropped to 100 € in June. She saidAlthough her family doesn’t eat as much during summer, she’s worried about the consequences. SeptemberWhen she will need to buy school supplies forHer budget was further reduced by her 8-year old son and her daughter, who are both 15 years old.

French President Emmanuel MacronAccording to the government, they are trying to conserve energy by turning off public lighting at night and taking other steps. Similarly, GermanOfficials are asking people and businesses for energy savings and requesting lower heat and air conditioning settings in public buildings.

ItThese are the next RussiaReduce or cut off natural gas by a dozen European countries. Also, a major pipeline of gas was shut down forLast week was scheduled maintenance. There are concerns that water could be leaking through. Nord Stream1 between Russia GermanyIt will not start again.

Germany’s biggest importer of Russian gas, Uniper?, has asked forAfter it was forced between skyrocketing gasoline prices and the maximum it could charge customers, government assistance was needed.

Carsten BrzeskiChief Eurozone economist at ING bank, Xavier Yen, predicts a recession towards the end ofHigh prices and low purchasing power are the hallmarks of the year. Europe’sThe ability of governments to make large investments will determine the long-term growth of economic activity. forThe transition to a renewable energy economy.

“Without investment, without structural change, the only thing left is to hope that everything will work as before — but it won’t,” Brzeski said.

While EuropeIs suffering? RussiaThe government has extensive intervention to stabilize the ruble exchange rate, stock markets and inflation. RussianOil is finding new buyers in AsiaAs western customers return to their roots, they are able to purchase the products at a discounted price.

AfterBeing hit with sanctions for the 2014 seizure of Ukraine’s CrimeaThe region KremlinBuilt a fortress economy by keeping the debt low and encouraging companies to source food and parts within their borders. Russia.

ThoughIKEA, a foreign-owned business, has been closed. RussiaIt has defaulted in its foreign debt forFor the first time since over 100 years, it’s absurd. ofDowntown facing an imminent crisis Moscow. WellYoung, well-off people still frequent restaurants even though they may not be wealthy. Uniqlo, Victoria’s Secret ZaraStores are closed on the seven-story. Evropeisky mall.

TheMcDonald’s successor, Vkusno-i TochkaWhile the latter is more or less similar to the food served by, Krispy KremeIn the mall, the brand has changed but it still sells the same products.

InProvinces with lower incomes are less fortunate Sofya SuvorovaWho lives in? Nizhny Novgorod, 440 km (273 mi) Moscow, feels the pinch on their family budget.

“We practically do not order takeaway food anymore,”she saidWhen shopping at a grocery store. “It used to be very convenient when you have small children. We go to cafes less often. We had to reduce some entertainment, like concerts and theatres; we try to keep this for children, but adults had to cut it.”

EconomistsThe ruble’s currency rate is stronger than the U.S. Dollar before the war, and falling inflation create a misleading picture.

RulesStopping money leaving the country and forcing foreigners to exchange. ofThey have rigged exchange rates to convert their foreign earnings from oil & gas into rubles.

AndInflation rate “has partially lost its meaning,” Janis KlugeExpert on the RussianEconomy at the German Institute for International Security AffairsA recent analysis was written by. That’sBecause it doesn’t account forThe disappearance of western goods and lower inflation are likely due to sagging demand.

Some2.8 Million RussiansAccording to a political scientist, they were employed in 2020 by mixed-owner foreign firms. Ilya Matveev. IfAs many as 5,000,000 jobs are available to suppliers, which is 12% ofThe workforce is dependent on foreign investment.

Foreign companies may find RussianProtectionism, owners and a glut ofMass unemployment will be prevented by government jobs

ButThe economy will be much less productive. Kluge said, “leading to a significant decline in average real incomes.”