War and sanctions means higher inflation
But not necessarily higher interest rates
RUSSIA MAY have tried to build a “fortress economy”, but it is the West that currently looks financially impervious. Compared with the deep economic crisis brought about in the country by Western sanctions, the consequences for the rich world have been small. Though American stocks fell sharply when the war started on February 24th, on March 2nd they closed almost 4% higher than their level the night before the invasion. European stocks are about 4% down—a big hit, but nothing compared with the financial rout under way in Russia, where the currency has collapsed and stockmarket trading has been suspended for days.
This article appeared in the Finance & economics section of the print edition under the headline “The world economy at war”
Finance & economics March 5th 2022
- China scrambles to prevent property pandemonium
- War and sanctions means higher inflation
- The war in Europe is a triple whammy for emerging markets
- European banks have most to lose in Russia
- South Korea’s economy threatens to become like Japan’s
- Investors are terrible at forecasting wars
- Vladimir Putin’s Fortress Russia is crumbling
From the March 5th 2022 edition
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