MACROECONOMIC IMPACT OF THE CONFLICT BETWEEN RUSSIA AND UKRAINE THE GROSS DOMESTIC PRODUCT OF SERBIA
DOI:
https://doi.org/10.61837/mbuir010223021mKeywords:
Conflict, Russia, Macroeconomics, Economy, Gross domestic productAbstract
The conflict between Russia and Ukraine comes at a time when countries around the world are still recovering from the destabilizing effects of the global COVID-19 pandemic, which has caused deep economic regression, significant loss of productivity, worsening inequality, planetary pressures, and in some cases, security challenges. The economic impact reverberated through multiple channels, including commodity and financial markets, trade and migration links. At the same time, rising inflation is increasingly reducing the purchasing power of consumers. Such market tensions will reduce economic activity while accelerating inflation with the appearance of stagflation, where the state of the economy is characterized by a general jump in prices along with a drop in production. The direct effects of this conflict lead to macroeconomic instability. This conflict causes a jump in global prices, affects economies around the world, and it is expected that developing markets and countries in the European region, especially the countries of the Western Balkans, will bear the brunt. On the side of macroeconomic stability, the effects differ depending on their exposure to the market of Russia and Ukraine.True, the Republic of Serbia does not have significant, direct trade ties with Ukraine, but the conflict has put Serbia in front of new challenges, taking into account its energy dependence on Russia, as well as the agricultural sector, where products, primarily fruit, have a significant share in total exports to Russia. The key question that arises is in which direction the conflict will affect the macroeconomic stability of the Republic of Serbia.
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