Six months after Russia invaded Ukraine, the consequences are posing a devastating threat to the global economy, including companies like Zinkpower, which employs 2,800 people. Gas is not only much more costly, but it also might not be available at all if Russia completely cuts off supplies to Europe to avenge Western sanctions, or if utilities can't store enough for winter.
Germany may have to impose gas rationing that could cripple industries from steelmaking to pharmaceuticals to commercial laundries. "If they say, we're cutting you off, all my equipment will be destroyed," said Kopf, who also chairs Germany’s association of zinc galvanizing firms.
Governments, businesses, and families worldwide are feeling the war's economic effects just two years after the coronavirus pandemic ravaged global trade. Inflation is soaring, and rocketing energy costs have raised the prospect of a cold, dark winter. Europe stands on the brink of recession.
High food prices and shortages, worsened by the cutoff of fertilizer and grain shipments from Ukraine and Russia that are slowly resuming, could produce widespread hunger and unrest in the developing world.
Even before Russian President Vladimir Putin ordered the invasion of Ukraine, the global economy was under pressure. Inflation had skyrocketed as a stronger-than-expected recovery from the pandemic recession overwhelmed factories, ports, and freight yards, causing delays, shortages, and higher prices. In response, central banks began raising interest rates to try to cool economic growth and tame spiking prices.
All those challenges might have been manageable. But when Russia invaded Ukraine on Feb. 24, the West responded with heavy sanctions. Both actions disrupted trade in food and energy. Russia is the world’s third-biggest petroleum producer and a leading exporter of natural gas, fertilizer, and wheat. Farms in Ukraine feed millions globally.
Syahrul Yasin Limpo, Indonesia's agriculture minister, warned this month that the price of instant noodles, a staple in the Southeast Asian nation, might triple because of inflated wheat prices. In neighboring Malaysia, vegetable farmer Jimmy Tan laments that fertilizer prices are up 50%. He’s also paying more for supplies like plastic sheets, bags, and hoses.
In Karachi, Pakistan, far from the battlefields of Ukraine, Kamran Arif has taken a second, part-time job to supplement his wages
“Because we have no control over prices, we can only try to increase our income,’’ he said.
A vast majority of people live in poverty in Pakistan, whose currency has lost up to 30% of its value against the dollar and the government has increased electricity prices by 50%.
Muhammad Shakil, an importer, and exporter, says he can no longer get wheat, white chickpeas, and yellow peas from Ukraine.
“Now that we have to import from other countries, we have to buy at higher prices" — sometimes 10%-15% more, Shakil said.