Josep Borrell, High Representative of the European Union (EU) Foreign Relations and Security Policy, has published a blog post about the Russia-Ukraine War and its effects on the global economy.
Reminding that the EU has close economic ties with both Russia and Ukraine, Borrell stated that the EU also felt the negative economic consequences of the war.
Borrell reminded that there was a sharp increase in inflation due to the pressure of food, energy and major commodity prices due to the war.
Reminding that inflation remained high throughout 2021 as a result of the increasing demand caused by the economic recovery after the epidemic and the ongoing interruptions in the value chain, Borrell stated that the war accelerated the increase in inflation.
Josep Borrell reported that inflation affects the poorest and the weak more, increasing inequalities around the world.
“In recent weeks, we have observed a rapid decline in share prices and an extraordinary depreciation in cryptocurrencies in the financial markets.” Borrell said, noting that this could trigger a new financial crisis.
Borrell argued that in this case, international capital would leave high-risk investments in finance and turn to safer places such as the USA.
Stating that the aforementioned risk has started to materialize, Borrell stated that the dollar exchange rate has increased rapidly in the last period, and that this feeds inflation more in countries whose currency depreciates.