On July 29 2022, Red Lantern Analytica conducted a webinar titled “Economic repercussions for Europe amid the ongoing Russia-Ukraine War”. Dr. Tanjot Singh, Assistant Professor in the Department of Economics at Gargi College, University of Delhi, was the webinar’s expert speaker.
Dr. Tanjot began her address by stressing that the ongoing military confrontation between Russia and Ukraine will have significant ramifications for the European Union. These include the oil crisis, inflation, food shortages, unemployment, a decrease in the manufacturing sector, and the possibility of a recession in the future. Short-term effects may include a collapse of bilateral trade between the EU and Russia and a reduction in capital for EU enterprises. In the following years, the enormous number of refugees and reconstruction costs could result in significant budgetary costs for the EU, while defense-related expenditures could witness a sharp increase.
She went on to say that despite the fact that the EU has placed various types of sanctions on Russia, their impact has been significantly diminished due to Russia’s preparations to locate alternative export markets in advance. India is an example where Russians have expedited and improved bilateral trade; while Saudi Arabia and African nations are other notable mentions.
The European Union’s future, she believes, is bleak, with research indicating a 55% chance of a European recession as a direct result of the Russia-Ukraine conflict. She gave the example that the pre-sanctions price of a barrel of oil was $80, whereas it is currently $129. Such an enormous increase in energy prices has pushed EU inflation to an all-time high. This can also be attributed to the fact that in the EU, 40 percent of natural gas is used for residential purposes, 35 percent for industrial purposes, and 15 percent for energy production.
She concluded her address by stating that the EU has requested its member states to restrict their energy usage and reduce their natural gas consumption by 15 percent. This rationing will have a cascading effect on the output of all European Union manufacturing centres. It is also anticipated that high energy prices will kill its industries by lowering corporate competitiveness and consumer confidence. The ramifications of this will be seen as a result of the trade restrictions, which will force the EU to seek alternative energy sources, which will undoubtedly exacerbate the economy’s precarious state.
Following the address of the guest speaker, there was an in-depth Q&A session. Ms. Shalini, a research associate at Red Lantern Analytica, moderated the session. The vote of thanks was delivered by Ms. Sakshi Sinha, an intern at RLA. The session closed after the vote of thanks was given.