China's Shanghai-based official 'Paper' (March 23) published a detailed assessment of the
economic fallout of the war in Ukraine. It assessed that "In the short term, the RussianUkrainian conflict is leading to a rapid deterioration of the world economic outlook, and the
European economy will be severely affected; in the long term, the Russian-Ukrainian conflict
may lead to changes in energy trade, reconfiguration of supply chains, fragmentation of
payment networks, and prompts countries Reconsider its holdings of foreign exchange reserves,
which could fundamentally alter the global economic and geopolitical order." It said in articles
and research papers the IMF and OECD said that "in the short term, the conflict between Russia
and Ukraine is causing the world economic prospects to deteriorate rapidly, and the European
economy will be severely affected; in the long run, the conflict between Russia and Ukraine
may fundamentally change the global economic and geopolitical order." It specifically noted
that on March 15 a number of IMF officials, including Director of the Asia-Pacific Department
Li Changyong, jointly wrote an article highlighting "the negative impact of the situation in
Ukraine and sanctions against Russia". They believe "on the global economy is mainly
transmitted through three channels: first, rising prices of commodities such as food and energy
will further push up inflation, thereby eroding residents’ income and suppressing demand; ,
Ukraine's neighbouring economies will face disruptions in trade, supply chains and remittances,
and a historic surge in the number of refugees. Third, declining business confidence and rising
uncertainty will weigh on asset prices, leading to tighter financial conditions and potentially
stimulating international Capital flows out of emerging markets." Saying that "latest OECD
estimates that the conflict between Russia and Ukraine may reduce global economic growth
this year by at least 1 percentage point and increase inflation by 2.5 percentage points", it added
that the "conflict will make Europe feel "the most pain" and the European economy will suffer
the most." It further said that "IMF officials pointed out that in the long run, the RussianUkrainian conflict could lead to changes in energy trade, reconfiguration of supply chains,
fragmentation of payment networks, and prompt countries to reconsider their foreign exchange
reserves, which will fundamentally change the global economy and geography political order."
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