Russia Crisis

Following weeks of escalating tensions, Russia launched an attack on Ukraine on Thursday, February 24, 2022. Portfolio Manager John Paul Lech and Senior Research Analyst Alex Zarechnak discuss their views on the potential ramifications for the global economy and the markets.

What are the main overarching economic ramifications of Russia’s invasion of the Ukraine at present?

Russia’s invasion of Ukraine has, unsurprisingly, created shockwaves through the markets. Russian stocks and the ruble have tumbled. Global equities plunged as well while oil, gold and European gas prices have surged. Brent crude, the world’s energy benchmark, climbed over US$100 a barrel for the first time since 2014. Volatility will likely persist in the near term as the conflict continues and there will likely be supply challenges and further upward inflationary pressures.

How effective will Western sanctions be in curbing Russia’s incursion into Ukraine?

The sanctions that have been imposed so far are fairly incremental. We describe Russia as having a fortress, macroeconomic environment. It has a massive budget surplus and a massive current account surplus. These are two classic ways of reducing dependence on the outside world and both have been engineered by Russian President Vladimir Putin.