Economic impacts due to Russian invasion expected to affect Island residents


Investor reaction to the Russian invasion of Ukraine is already hitting the global market.

Market Economist with Price Street Inc. in New York, Rory Johnston, said European and North American stocks were on a roller coaster ride throughout the day.

“As of this stage, it’s mostly on a very kind of worried market risk and uncertainty being built-in,” Johnston.

Russian stocks plunged more than 40 per cent and oil prices are surging, breaking the $100 US a barrel price for the first time since 2014.

That’s bad news for Canadian consumers, according to the Director of the Agri-Food Analytics Lab, Dalhousie University, Sylvain Charlebois.

“Canada is a trucking economy. North America is a trucking economy. So to move anything around costs more,” Charlebois said. “That’s going to hit us very, very quickly. within probably a week or two.”

That’s going to translate into higher prices at the pump within a few days.

Then, according to Charlebois, the conflict will hit the grocery store shelves.

“So grain-based products will be impacted first, like bakery, for example. You may see centre store items being impacted as well,” Charlebois said.

Saul Klein, Dean, Gustavson School of Business at the University of Victoria said the consequences of the invasion will be felt globally.

“Our world is so interconnected that anytime anything happens in one place, that has a follow on effect, everywhere,” Klein said.

He said higher energy prices will make everything more expensive, driving prices up, and fanning the flames of inflation already at record highs.

“One of the ways that central banks will respond to increasing inflation is to raise interest rates,” Klein said. “At this point, they’re going to be much more wary of doing that, because the consequences of putting a negative pressure on the economy just increased dramatically.”

While the Canadian economy is on solid footing ripple effects will be felt close to home.

Klein said retaliation for sanctions imposed by Canada and other countries could translate into cyber-attacks.

“At the extreme, they could target infrastructure. All of our critical infrastructure relies on technology. It’s all technology enabled that could disrupted.”

Most analysts agree there’s likely to be more financial fallout to come, depending on how long the conflict will last, and how far the economic impact spreads.

READ MORE: Russia’s attack on Ukraine has Baltic nations wondering if they are next

Mary GriffinMary Griffin

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