Impact of the war on the global economy

Despite the growing economic problems the Orbán government still has everything under control, argues Magyar Nemzet:

“In terms of both exports and imports, Hungary's economy is vulnerable. ... Nevertheless, it should be noted that despite external shock waves the Hungarian economy will grow by three to five percent this year. For its part, the budget deficit can be reduced by temporarily suspending state investments. So the situation is not all that gloomy. ... The apocalyptic mood among the government's critics is therefore completely unnecessary.”

The rising prices in the UK should not distract from the global consequences of inflation, warns The Guardian:

“In Somalia, the UN's Food and Agricultural Organization (FAO) predicts, more than 6 million people will fall into 'crisis, emergency, or catastrophic levels of hunger' within the next two months. ... Next week, finance ministers from around the globe will fly into Washington DC for the spring meetings of the IMF and World Bank. There, they could agree to make up the humanitarian aid needed in the Horn of Africa, Afghanistan and elsewhere. They could restructure the debt of poorer countries, cancelling those loans that are simply unpayable, and suspending interest payments on others.”

Le Soir sees the rapidly rising prices as alarming:

“Inflation is devouring purchasing power on the one hand and damaging the competitiveness of companies on the other. ... In the long run, this could slow down the economy and cost jobs. All governments are currently under major pressure to counter the growing concern of consumers and businesses who see their bills skyrocketing and their standard of living at risk. ... Especially since prices are rising at such a rate that they hardly know how to stop it. ... This time it is the wallets of 'the people' that are at risk, and that says a lot about the real scale and potential danger of the new challenge that is being imposed on the political world.”

Portugal's new government must prepare the population well, writes Jornal de Notícias:

“The effects of the conflict between the Ukrainians and the Russians have abruptly destroyed all plans. [Prime Minister António] Costa is expected to have the sense to dig new trenches caused by the war and to recognise the economic consequences. ... The point is to convey the seriousness of the situation to the Portuguese without populism or alarmism, but truthfully. ... This will be the third abrupt impoverishment of the country this millennium, leaving its mark on the younger generations and ruining the expectations of many millions of citizens. It is fortunate that we have the support of the EU, but that should not induce us to sit back and relax.”

Putin's war is highlighting the flaws of EU agricultural policy, Die Presse comments:

“Energy (especially diesel) and artificial fertilisers account for a fifth of the grain farmers' production costs, the European Parliament has revealed in a motion for a resolution. In both cases, the EU is almost entirely dependent on imports, especially from Russia and Belarus. Why has no one reflected on whether this is reasonable? Europe produces cheap food on credit because it seems that for many politicians the daily schnitzel is tantamount to an article in the EU Charter of Fundamental Rights. For this we are willing to accept soil leaching, overfertilisation, and nitrate poisoning of the groundwater. But these costs for the general public are not reflected in the prices at the supermarket.”

It is essential to act quickly now to prevent far-right parties from fishing in troubled waters, writes El Periódico de Catalunya:

“Vox is positioning itself as the party that aims to capitalise on the unrest, knowing that angry people on the streets could destabilise the government and boost Vox's chances in the elections. ... It is urgent that measures are taken to deal with the crisis. ... The government argues that it is necessary to wait for the European Council meeting on 24 and 25 March before deciding whether to decouple the price of gas from that of electricity. ... But there are other European governments that are also affected and that have already brought forward a reduction in fuel prices. Perhaps our country should follow their example.”

Alex Papachelas, editor-in-chief of Kathimerini, writes:

“The rising cost of living and popular discontent may also prove the secret weapons of Russian President Vladimir Putin, who is counting on the Europeans not taking two paths open to them: stopping gas imports from Russia and sinking their countries into an even deeper recession and social crisis for at least a year, or responding militarily. Or they can do nothing at all. There is nothing easy about a Western leader having to choose between hunger and war. And it seems impossible that we should even be talking about this in Europe, in 2022.”

The travel industry plays an important role for Turkey and should therefore receive state aid, Hürriyet demands:

“In our country, the sector expects at least 100 million tourists and foreign currency revenues of 100 billion dollars over the next seven to eight years, meaning that it assumes a kind of guarantee function for our national economy. ... In view of the current uncertainty, the distribution channels need to be protected by a special resolution. ... Germany has managed to keep the country's biggest tourism brand TUI alive during the pandemic with a loan of three billion euros.”

Along with Lithuania, Estonia, Germany, Poland and Britain, Russia has been a key trading partner for Latvia until now. The role of its neighbour to the east should not be overestimated, Diena writes:

“The average consumer won't even notice the disappearance of Russian goods, there are alternatives in all sectors. In the two years of the Covid-19 pandemic, the Latvian tourism industry has learned to get by without travellers from Russia. Many companies have considered Russia a risky partner since 2014, when it occupied Crimea and the West imposed sanctions. ... Already in the 1990s our country gained very valuable experiences in reorienting its economy towards the West.”

We must make globalisation more ethical, urges economist Étienne de Callataÿ in La Libre Belgique:

“Left to their own devices, private companies seek to minimise the cost of their purchases and agree to concentrate them, even if it means becoming dependent on a country with an autocratic or unstable regime. Covid-19 has exposed the lack of resilience of market economy value chains. The Russian invasion is even more explicit, in that it reveals the extent to which our economies are hostage to the aggressor and thus less able to react. ... Establishing ethical regulations in international trade is not only a principled demand but also a political necessity!”

Polityka is concerned about the rising grain prices:

“Ukraine, often called 'Europe's breadbasket', cannot make a significant contribution to improving the situation on the world food market, at least for the time being. Ukraine even overtook the US in grain exports last year, becoming the third largest supplier after Russia and Australia. ... Rising bread prices could easily trigger violent popular protests in other countries as well. ... Such social discontent has already become evident in Morocco in recent days. In Tunisia, which already had great difficulties paying for imported grain before the Russian invasion, the situation is becoming more difficult by the day.”

In view of the probable consequences of the war, the European Central Bank is no longer ruling out interest rate hikes. But it has little room to manoeuvre, the Frankfurter Rundschau comments:

“The high inflation is forcing it to tighten monetary policy, albeit extremely cautiously, because more robust measures could smother the economy, which is already threatened by the consequences of the war. In any case, monetary policy can do little to counter rising energy prices, the main driver of inflation. Once again the ECB has missed a window of opportunity and started fighting inflation too late. It's also not very much in demand as a crisis manager at present. These days we are also seeing a demystification of the central bank.”

Estonia now needs stable, long-term budget planning, Õhtuleht warns:

“With the ongoing Ukraine war, it's clear that further price shocks may be in store. If the state reacts to every price jump by lowering fuel taxes or VAT, how will it finance the sharp rise in spending resulting from the war and the sanctions? Money will also be needed to boost the defence budget. So in the long run, adjusting individual taxes will not help. Instead, a year before the election it is high time for a debate on fundamental tax reform in Estonia.”

Russia is relapsing into a planned economy, The Insider laments:

“This isn't just a serious economic crisis, it's the disintegration of the whole economic model. The clock has jumped back 30 years, we're back at the crossroads of 1991, only we're going in the opposite direction. And 1984 doesn't seem far off. ... Shares in Russian companies cannot be sold for all money in the world. Every day since February 27, the central bank has announced that stock market trading will remain suspended the next day. In practice this means that all the large private capital funds are set to zero. What will become of their owners now? They'll simply be chief administrators. Their role will be no different from that of the directors of the late Soviet era.”