Impact of Ukraine-Russia war on big economies, The UK may slip into a Recession
Vinayak Barot
New Delhi: The endless-looking dispute between Russia and Ukraine may damage the economy of certain countries, and the United Kingdom (U.K.) could be the worst hit nation by the battle between these two countries. Before February, the U.K. was one of the big economies trading with Russia in a high amount.
According to UK-based financial experts, the possibility of recession surged in the country, and the Price of GBP (the U.K.’s Currency) has fallen immensely in the last few months as the trade between the U.K. and Russia slashed noticeably in the last few months.
The pound has fallen 10 percent since the end of August when it was worth $1.16 – although this was a six-year-low in itself. At the beginning of 2022, £1 was equal to $1.35. The pound has also fallen against the Euro, with the European currency now worth €1.11. It had been €1.19 at the end of July 2022.
According to the media report, Foreign currency exchange rates are displayed in Fleet Street for the benefit of travelers to the UK, on 27th September 2022, in London, England. LONDON — The U.K. is already in the throes of a full-year recession, according to S&P Global Ratings, while Europe faces a tough winter and rising credit risk.
The Organization for Economic Co-operation and Development (OECD) says, “The world’s leading economies are sliding into recession as the global energy and inflation crises sparked by Russia’s invasion of Ukraine cut growth by more than previously forecast.”
A dependency on expensive gas for heavy industry and home heating will plunge Italy, Germany, and the UK into a long period of recession after global growth was projected by the OECD to slow to 2.2% in 2023 from a forecast in June of 2.8%.
OECD’s interim chief economist, Álvaro Pereira, said the world was paying a steep price for the Ukraine war and Russia’s decision to restrict access to gas supplies more tightly than was forecast in June.
Goldman Sachs – an American multinational investment bank and financial services company said “The UK economy is forecast to dip into a recession by the end of this year, with the deep contraction lasting until 2024.”
China’s growth rate is expected to drop this year to 3.2% – its lowest since the 1970s – causing a large decrease in trade with neighbours South Korea, Vietnam and Japan, dragging down their capacity to grow.
France could escape a recession if it grows by 0.8% next year as predicted by the OECD, but will suffer along with other European countries after the downgrade in GDP growth since June of 1.3 percentage points.
Russia will shrink by at least 5.5% this year and 4.5% in 2023. Berlin’s dependence on Russian gas before the invasion means the German economy will shrink by 0.7% next year, down from a June estimate of 1.7% growth.
