China Raises Global Inflation Concerns Amid Ukraine Crisis

Rising Energy, Food, and Raw Material Prices to Worsen Global Bottlenecks
Possible Division into Different Economic Groups Worldwide

[Asia Economy Beijing=Special Correspondent Jo Young-shin] China's state-run Xinhua News Agency reported on the 3rd that the Ukraine crisis, including rising energy and food prices, could trigger global inflation and shake the world economy.

[Image source=Yonhap News]

Xinhua pointed out that if the Ukraine crisis continues, problems such as rising energy, food, and raw material prices, worsening global supply chain bottlenecks, and the politicization of global finance and trade could occur.

The agency first expressed concern that the conflict between Russia and Ukraine could cause global inflation due to rising prices of energy, food, and international raw materials.

In fact, on the 2nd (local time), the price of West Texas Intermediate (WTI) crude oil for April delivery rose about 7% that day, closing at $110.60 per barrel. This is the highest level since 2011. Brent crude prices also rose more than 13% intraday, reaching $113.98 per barrel. Xinhua cited experts who forecast that $100 oil may not be the peak but the beginning of the rise.

Xinhua also expressed concern that international agricultural product prices could soar. It explained that Ukraine and Russia account for 30% of the global wheat export market and are major global food warehouses. Xinhua added that Ukraine's share of global corn and wheat exports is 16% and 12%, respectively.

Xinhua warned that if the Ukraine crisis continues until July, wheat prices could double and corn prices could rise by up to 30%.

In particular, it reported that some countries in the Middle East and Africa heavily depend on wheat imports from Ukraine and Russia, and if the Ukraine crisis persists and worsens, social unrest could occur in those regions.

Xinhua also expressed concern that the Ukraine crisis could worsen global supply chain disruptions, causing bottlenecks in manufacturing worldwide. It predicted that maritime and air transportation between Asia and Europe would be affected, directly impacting related products such as electronics and automobiles.

Xinhua reported that maritime transportation in the Sea of Azov and the Kerch Strait, located in Russia, Ukraine, and the Crimean Peninsula (Geumgangbando), has effectively been halted. The Sea of Azov and the Kerch Strait are maritime routes mainly used for transporting iron ore and grains.

Xinhua also noted that prices of palladium, which Russia supplies 40% of globally, as well as nickel and aluminum, have risen, raising concerns about production disruptions in automobiles, mobile phones, and medical facilities.

Additionally, Xinhua forecasted that the limited maneuvering room for central banks' monetary policies worldwide could negatively affect the global economic recovery. While tightening fiscal policies are needed to curb inflation, rising international raw material prices make it impossible to implement normal monetary policies.

Xinhua further predicted that the exclusion of Russia from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) by the United States and the European Union (EU) would adversely affect global finance and trade. It pointed out that due to geopolitical factors, the world could be divided into different economic groups, facing headwinds. Xinhua added that as geopolitical uncertainties increase, the world must remain vigilant about the medium- to long-term impacts.

This content was produced with the assistance of AI translation services.