War in the Ukraine is sending world economies for another roller coaster ride as we’re slowly rebuilding from the devastation of COVID-19 and years of public health restrictions.
Inflation has been the hot topic for the last few months and judging by the price of gas, it could have a longer and deeper impact than originally forecasted. We’ve gone from less than $1 a litre in March of 2020 to nearing $2 this week.
The events in the Ukraine are incredibly tragic.
Canada has been growing its trade with Ukraine over the last few years, especially since the signing of the Canada-Ukraine Free Trade Agreement in 2017. We export a significant amount of fish and seafood, machinery, vehicles and parts, meat, and electronics with a growing export of aerospace products and wood pulp. In return, we’ve been importing steel, electronics, and vegetables. In 2019, Ukraine supplied 26% of our apple juice and 6% of our snow skis.
In total, the Government of Canada values trade between our two counties at about $340 million and it’s all essentially on hold.
It’s significantly lower than the $1.5 billion in business we do with Russia, to whom we export aircraft, machinery, and electronics and import energy, rubber, iron, copper and fertilizer. We’ve brought in sanctions against Russian products, but it’s not so simple to find new suppliers. Fertilizer producer Nutrien Ltd. is expecting a global shortage of fertilizer, impacting crop productions around the world.
Both fall well short of our $700+ billion trading relationship with the US, but the implications will be felt across sectors in our economy. Russia is the second largest oil exporter in the world and sanctions and import preferences mean demand for more ethically sourced oil is driving prices throughout the roof everywhere.
Add to this an increase in fuel demand as many areas scale back COVID-19 health measures leading to more travel to visit friends and family, in-person work at the office and visiting clients, and the resumption of recreational travel and tourism.
We need fuel to farm, mine, and manufacture goods. We need fuel to transport retail goods to your local store, fresh produce to restaurants, and supplies for local makers. There’s hardly a business not dealing with the effects of high fuel prices, let alone the rest of the inflation-related issues.
The timing of this crisis is challenging for our economy and our local business, but it’s important to remember the human side. More than 1.5 million people have left Ukraine as refugees with more likely to come. The Government of Canada has pledged its assistance in placing people. Much like the influx of Syrian residents a few years ago, it’s likely our community will host another round of refugees.
While our hope is that our world leaders will successfully avert another world war, a global economic crisis is well underway. World economies are so intertwined that even products we produce and consume domestically (like gas) are subject to the whims of global markets. The resilience of our local business community is once again coming to the forefront to take on the next global crisis.