University of São Paulo: Soaring commodity prices a consequence of sanctions on Russia

The post-pandemic world economic recovery had only begun when the Russian invasion of Ukraine caused the price of several products to skyrocket, especially in the case of oil, steel and grains. Experts are divided on the possibility of a global recession, but the impact of economic sanctions on Russia is already visible: one indicator is the rise in food and commodity prices on the international market, for example.

In an interview with Jornal da USP in the Ar 1st Edition , Simão Silber, professor at the Faculty of Economics, Administration and Accounting (FEA) at USP and researcher at the Fundação Instituto de Pesquisas Econômicas (Fipe), says that, in the short term, it is unlikely a fall in the value of world GDP. “What is expected for 2022 is a slowdown in [the economy’s] growth, not a recession,” he says.

The Russian financial system, however, could be in crisis due to worldwide reprisals for the war. In addition to Ukraine itself, which, in the professor’s words, is “destroyed after three weeks of attacks”, European countries tend to be the most affected by the effects of the conflict. “The impact in Europe will be worse than in the United States, a country that is relatively independent in energy and grain production”, completes Silber.

Increase in fuels
On the national scene, the consequences of the war are already perceptible in the increase in fuel prices: last Friday (11), Petrobras announced an 18.8% readjustment in the average price of gasoline and 24.9% in the diesel, based on fluctuations in the value of oil on the global market. “In the wake of the fuel readjustment, everything goes up, because Brazil is a highway country. We don’t have railways, we don’t have maritime transport, what we have are trucks, which need diesel.”

The agroindustry will also suffer from the impact of the increase in the price of fertilizers, a product previously imported from Russia. As a result, “the level of poverty will increase a lot in Brazil, because people will not have money to feed themselves”, says the researcher. “Brazil would have very modest growth [in the economy] this year, but now the probability of facing a recession in 2022 is not non-existent”, he concludes.

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