Booom! Booom! Booom! The drums of war are beating louder and louder, and from almost every side newer information about the impending Russian offensive on Ukraine is coming. If this happens, we will all feel the impact of this event, also economically.
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In the context of the world economy, war can very often become a driving force for the economies of individual countries, especially those that have to offer the necessary equipment in such circumstances. For everyone else, it will mean mainly losses, including, for example, Poland. After all, our country is in the immediate vicinity of the impending conflict, and its specter is already visible near the eastern border.
How much will we lose?
If Ukraine and Russia switch to war modes, our economic relations with these countries would be seriously affected. By the way of the Russians, it will probably be associated with a number of sanctions that will certainly be applied to the aggressor. When it comes to Ukraine, we are dealing here with many companies that operate on the local market and when Kiev enters a state of conflict and threats to sovereignty, their further activity will be questionable.
The Chamber of Commerce, which deals with relations between Poland and Ukraine, warns that economic exchange between the two countries, which has only been growing recently, may collapse in the event of war. Its value increased by as much as 44 percent in 2021 to 10.4 billion dollars, exceeding the record level from 2007.
Sectors such as, of course, metallurgy, which are already hard hit by the huge energy crisis and astronomical gas and electricity prices, would suffer the most. Companies operating in such sectors as chemical, food and electromechanical are also disappointed. Interestingly, Polish Oil and Gas Mining, which last year bought a majority stake in Karpatgazvydobuvannya, which has a gas production license in Ukraine, may also have problems. If the Russians actually installed a puppet government in Kiev, this whole business would be put into a huge question mark.
Russian roulette
Speaking of Russia, a cooling down should also be expected in these relations. After all, it is from this country that Poland obtains a large percentage of its raw material resources: 65 percent of our oil resources, 75 percent of coal or 55 percent of gas. The risk is therefore enormous, especially if Poland supports Ukraine in this conflict, and it will probably be so. In the event of a supply interruption, which is possible, as experts predict, our country will be able to mobilize its reserves, but these will be enough for a maximum of several months and will certainly affect even higher prices paid by end users.
Is it possible for trade to cease completely? This is a possible scenario, but only in the event of Russia's total aggression against Ukraine. If the actions only took place on the eastern flank, then the results would not be so deplorable.
At this point, however, we come to an issue that we have already raised in Automation Trader many times since the outbreak of the pandemic. This is, of course, about supply chains, which are already severely strained. It must not be forgotten that trade routes leading to Europe from China run through Ukraine and Belarus. The regime of Alexander Lukashenka is unfortunately no reliable partner and has already threatened the West with the blockade of trains. These could, of course, have chosen a slightly longer route through Ukraine, but a possible war may change that.
In this case, you will have to focus on air and sea transport, but its load has been absolutely maximum for months. What's more, sea freight is several times more expensive today and not everyone will benefit from using it. Especially if we add to all this the extended delivery times in this way. - Disrupting supply chains is not only a lack of goods, but also a source of inflationary pressure. It must be remembered that at a time when sea freight prices have quadrupled, rail connections are of great importance - admitted Dr. Jakub Olchowski, who is an expert of the Institute of Central Europe, quoted by the portal "money.pl"
