Source: Pixabay

Ever since the pandemic outbreak, most countries have been going through major economic setbacks and the population has had to face an increase in the cost of living, mainly when it comes to food, fuel, electricity, and all basic human necessities. The situation has only gotten worse when the conflict between Russia and Ukraine escalated which also resulted in the uncontrolled increase in prices, which is not expected to subside any time soon according to experts.

Inflation

There are several factors that trigger a new economic recession, but according to the experts, inflation is one of the greatest dangers for the world economy. It not only impoverishes families, especially the poorest, but it also makes companies less competitive. Last week it already reached double digits in the interannual rate (10.2%), the highest level since April 1985, 37 years ago. The CPI has skyrocketed due to the war in Ukraine and supply problems with the Asian industry, but it had already been increasing in the months prior to the war in Ukraine, due to the increase in the price of fuel and electricity. In February, the indicator placed its annual variation in the second month of the year at 7.4%, more than one point above the one registered in January. In five months the rise in inflation has been almost four points. Not only are energy and food prices rising, but inflation has been spreading throughout the rest of the shopping basket too.

Economic Impact

The World Bank announces that the continuous interruptions in the economies, due to COVID-19 and the escalation of geopolitical tensions, have caused impacts through multiple channels, such as the financial and raw material markets, commercial and migratory relations, as well as investor confidence. These contexts have mainly hit the pockets of consumers with the rise in energy and food prices worldwide. This is one of the factors, which the World Bank refers, “has led a significant number of people to extreme poverty.” As soon as the conflict in Russia and Ukraine escalated, the Euro-Asian region immediately felt the effects, and subsequently, escalating, it has impacted the rest of the planet. Russia is a major exporter of energy and industrial metals, but, in addition, these two countries jointly supply more than 25% of world wheat exports.

Migration

Along with the economic impacts, there is also a wave of migration and refugees coming from both Russia and Ukraine, as well as from other impacted countries. The World Bank records that more than 4 million people have fled Ukraine. More than half have crossed into Poland and others have headed for Hungary, Moldova, and Romania. “It is estimated that the number of refugees will increase in the coming months, so the host countries will have to face the challenge of hosting them,” according to this organization. Since the president of the United States (USA), Joe Biden, announced that he would receive up to 100,000 people who are fleeing the war, in Tijuana, the Mexican border, people from Ukraine, Russia, and other countries continue to arrive every day. This new migratory flow is added to the thousands of people waiting to cross into the US, coming from Honduras, El Salvador, Guatemala, Cuba, Venezuela, and Haiti.

Frozen Salaries

It is one of the main current economic challenges as income affects everything, from interest rates to how we plan for the future. In the United States, the average wages have been stagnant for more than 40 years, moreover, in Japan and Germany, there has been no increase in 20 years. And it’s a global problem: “Over the last seven or eight years, wage growth has been very disappointing around the world,” says John Van Reenen, director of the Center for Economic Performance at the London School of Economics (LSE). Therefore, saving money has never been more important than now. The increase in the cost of living on European, American, African, and Asian continent have made most people worried and careful about how they spend their money. If you are into games of chance but are afraid of insecure websites you should check out top MasterCard casinos, where you can learn everything about safety, game selection, payment methods, and much more. The popularity and widespread acceptance of MasterCard at online casinos make it one of the most commonly used deposit options.

In conclusion, it seems like a financial crisis is inevitable, however, renewable sources of energy could be a key solution to part of this problem.