Amidst the Russia-Ukraine war, Forecasters are expecting the U.S. economy to grow even slower with rising inflation rates. Meanwhile, both Europe is expected to experience a severe economic recession and Russia will most likely plunge into a double-digit economic decline.
According to a report published by CNBC, Forecasters are anticipating the U.S. GDP to rise by 3.2% which is reading above-trend growth as the U.S. continues to recover from the Covid-19 pandemic. Many forecasters worry about the nationwide response to the rising gasoline prices, which are now averaging $4 per gallon. This is one of the main reasons they’re expecting low economic growth rates during this period.
If Russian oil was completely removed from everyone’s supply an increasing worry of economic stability would infiltrate every part of the globe.
The consequences of the abandonment of Russia’s millions of exported barrels per day would be very intense for the US and Europe. As more countries begin barring exports from Russia, JP Morgan expects all citizens to see increasing shocks to world growth and disrupted stocks, inflation rates, and economic balance.
However, oil companies are planning on boosting their profits through the need for increased drilling which will help provide more oil across the United States. Unfortunately, American families in certain regions of the county are expected to be hit hard by the boost of energy costs because of the high demand for oil production inside the economy instead of their usual oil exchanges to foreign countries.
Despite this, President Biden has still not affirmed his support for domestic drilling, rather focusing his efforts on additional sanctions and withdrawal from Russia’s gas export system. While this is admirable, many of the American citizens are wondering where the next major source of oil will come from.
Since energy prices are expected to continuously grow, there will be a major impact on the overall economic growth of the country. Some fear that the higher prices will cause U.S. growth to continuously decline for years to come. We may be in a long-term recession along with many other allied countries, well past the Russia-Ukrainian war.
Joseph Lavorgna of Natixis states that the US is on the cusp of recessionary inflation, as many feel the effects of higher prices with lower wages. This could be exacerbated by high food and gas prices.
Unfortunately, the effects of the Russia-Ukraine war will be worse for Europe than for anyone else and Russia will most likely have a hard to recovering financially.
Reports from Barclays have shown its growth for Europe is slowly decreasing as it is down 3.5% from the 4.1% it reported last month.
JPMorgan is forecasting a 12.5% decline in their GDP as Russia’s economy deals with the unexpected loss of $630 billion in foreign exchange reserves. In the midst of losing billions of dollars, it is now facing being cut off from the rest of the globe’s economy since making the decision to invade Ukraine. This will most likely lead to a double decline and Russia will probably never recover nor be the same again.
