Global Economy. Part 1/4

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Today we will begin a global economic analysis and analysis of what is happening in the world, which will consist of 4 articles, each subsequent article will be related to the previous one because all aspects of the economy have a direct impact on each other.

Food crisis

Current events around Ukraine and Russia have a huge impact on the global economy. Ukraine and Russia are the largest suppliers of fertilizers and grains in the world. They both account for more than 30% of total world grain exports, and taking into account the fact that China suffered from winter crops (minus 20% of the harvest according to the estimates of the Chinese Ministry of Agriculture), it is clear that Russia will redirect its grain exports towards the east, while nothing is clear with Ukraine at all now. However, if Ukraine is captured, we can forget about its grain exports to the west and south.

This is a huge problem for the EU countries, as it is about 25% of their grain imports. The same situation in the Middle East, Ukrainian grains accounted for 65% of Egypt's grain imports, 85% of Lebanon's, 70% of Turkey's and over 10 -15% of the neighboring countries.

Plus, Russia in response to Western sanctions has completely shut down the export of food fertilizers, as a result now skyrocketing prices of nitrogen fertilizers for the commodity market, which means that for the EU and the Middle East, even their own cultivation of grain will cost much more and bring less crops.

It will also be very difficult to buy from other countries, as the grain prices have already hit their 14-year highs, and this is far from being the limit. It is expected that the price for grains may grow many times over the upcoming months as the world is aware of the scope of coming global food crisis.

Besides, there are many complicating factors in supplies of provisions, unlike gas or oil, it is impossible to drastically increase the production of provisions, especially in such wild quantities. A number of countries have already banned grain exports, for example Hungary, one of the richest countries in Europe. All these factors inevitably lead to a multiple increase in food prices and food shortages, which means famine and, consequently, popular protests.

This concludes the first part of this article, you can skip to the second part at this link ;)

All of the above is not financial advice, but only the subjective opinion of the author, always do your own research and double-check the information yourself.
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