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The war in Ukraine and the effects on markets

Author
NMG
Date
10 May 2022
2 min read

The first quarter of 2022 has brought many new alarms and obstacles, both locally and internationally. As the fuel and electricity prices continue to rise on the local front, many of us are watching the war between Ukraine and Russia with growing unease.

Although Russia’s invasion of Ukraine has led to great unpredictability in global investment markets, South Africa’s trade links with Russia are quite limited: less than 1% of the total imports in 2021.

However, there will be effects that we will feel locally, in terms of certain commodities. International conflict always has a knock-on effect for South Africans, affecting the strength of our currency and our economy, inflation, and the prices of necessities such as fuel and food (specifically bread). This is because of the trade links that we have with other countries. Our imports of things such as wheat and sunflower oil; and exports of citrus products, nuts, tobacco, vegetables and fruit; will be impaired by the conflict in Europe. Ukraine and Russia account for more than a quarter of global trade of wheat when combined. They are also huge suppliers of corn and barely.

On the positive side, the political tension in Europe has increased the prices of some of South Africa’s key export minerals, such as gold and palladium.

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