Experts are beginning to issue dire warnings of high inflation, high unemployment, and low growth.
MSCI, the global data provider, has said in the light of the Ukraine conflict, events could significantly impact economies and financial markets worldwide.
‘Although global markets have not yet reacted that strongly, Russian financial markets have had a larger reaction compared to when the country annexed Crimea in 2014 - in particular after the last round of sanctions by the European Union and the US.’
‘Despite the 39% drop in Russian equities on February 24, the MSCI World Index was virtually flat that same day, and historically safe-haven assets did not gain dramatically. The environment continues to change rapidly, however.’
The company does have an optimistic scenario as part of its range of predictions: ‘In our optimistic scenario, a ceasefire and de-escalation of the conflict could stabilize energy prices around current levels. Apart from a small short-term impact, there are no persistent inflationary pressures. The hit to economic growth is small, and central banks stick to their plans for tightening monetary policy.’
