By Alicia Wallace
The war in Ukraine has thrown the global economy into chaos – and the worst is yet to come, experts say.
The conflict has disrupted logistics, business operations and trade pipelines across the world: sea, land and air freight are taking roundabout routes to avoid no-fly zones and hazards of war; multinational companies are abandoning operations because of sanctions and pressure to sever ties; and countries are scrambling to meet near-term energy needs — in some cases doubling down on coal — in their efforts to reduce dependency on Russian exports.
“Everything is coming to roost,” said Alla Valente, senior analyst on Forrester Research’s security and risk team.
“It’s not just logistics time, it’s not just the cost of oil or how much oil is being used, it’s not just waiting to get our shipment of semiconductor chips, it’s not just the transportation labor shortage,” she said. “It’s not any one of those things, it’s all of those things.”
Dysfunction in supply chains and energy will lead to even higher costs for consumers, businesses, governments – and, ultimately, the environment, experts say.
“War is an energy-intensive business,” said Nikos Tsafos, an energy and geopolitics expert at the Center for Strategic and International Studies. “It takes energy to move things around, to move troops and equipment.”
Near-term energy security efforts aside, the current crisis will likely spur Europe and others to accelerate their climate plans, wean themselves off fossil fuels and invest more in renewable energy technologies, said Ryan Kellogg, a University of Chicago Harris School of Public Policy professor who specializes in energy economics, environmental policy and industrial organization.
“All of that takes time. It’s not really going to help with the acute high prices and the pain that consumers are feeling now,” he said. “Where it does help is when the next crisis hits.”