Next to all the horrible affects a conflict has on people in the countries where it is happening, there are a lot of other impacts on our overall society, since our economies are strongly connected through globalisation.
A radical act of deglobalisation has separated Russia from the rest of the western economy. Over 30 countries have banned Russian aircraft from their airspace. Several foreign investors, including Shell, BP and ExxonMobil, are cancelling operations and exiting Russian investments. Well known consumer brands such as Apple, Nike or Ikea are no longer available in Russia and have paused their sells. While those changes are mainly impacting Russian inhabitants there are economic impacts that we can feel in the west as well.
First of all, we feel a strong inflation in prices: Groceries and gas prices are on a multi-decade high, and wages are unlikely to keep pace, significantly lowering European spending power.
Funk, a content network from ARD & ZDF (German public broadcasting), made two great practical examples to understand the increase in prices a bit better. When you now buy a cheese sandwich, you will pay 4,7% more for the cheese, 30,3% more for the cucumber, 27% more for the tomato, 17,1% more for the salad, 20,4% more for the butter and 7% more for the bread. That is an overall increase of almost 107%. When you buy a kebab, the price increase is the following: 17,1% more for the salad, 3% more for the meat, 7,3% more for the wheat flour in the bread, 0,5% more for garlic and onions and 27% more for the tomato. Here the overall price increases by 55%.
Germany is also in a difficult gas dilemma. With over 50% Germany is importing its gas from Russia. Again, that is more than half of all gas imports! About 30% come from Norway, 13% from the Netherlands and 1,5% from other European countries. To put sanctions on Russia and let their economy suffer to motivate them to end the crisis in Ukraine, Germany wants to stop the import of Russian gas as soon as possible. Problem is if they do not find a suitable alternative German inhabitants won’t have enough gas for next winter. Therefore, they are looking into alternatives, among others, with Qatar to change their gas supplier for the future.
In summary, prices are likely to increase further, putting especially people from a lower income class, like us students, into a problematic situation. Especially, after Covid where a lot of students lost their part time jobs, savings are on an all time low.
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