RUSSIA-UKRAINE CONFLICT RAISES BIG RISKS FOR GLOBAL ECONOMY

Just what a vulnerable world economy didn't need — a conflict that accelerates inflation, rattles markets and portends trouble for everyone from European consumers to indebted Chinese developers and families in Africa that face soaring food prices.

Russia's attack on Ukraine and retaliatory sanctions from the West may not portend another global recession. The two countries together account for less than 2% of the world's gross domestic product. And many regional economies remain in solid shape, having rebounded swiftly from the pandemic recession.

Yet the conflict threatens to inflict severe economic damage on some countries and industries — damage that could mean hardships for millions of people. Russia is the world's third-biggest producer of petroleum and is a major exporter of natural gas. Ukraine's farms feed millions around the world. And financial markets are in a precarious spot as central banks prepare to reverse years of easy money policies and raise interest rates to fight a resurgence of inflation. Those higher rates will likely slow spending and raise the risk of another downturn.

I wouldn't be misled by just calculating GDP ratios ... especially at a time when commodity prices are already high, inflation is already high said Elina Ribakova, deputy chief economist at the Institute of International Finance, a trade group for banks. It's a tricky moment now, given where the global economy is.

Russia's attack could slow Europe's economic recovery by sending already elevated energy prices ever higher. Europe, an energy importer, receives close to 40% of its natural gas from Russia. A cutoff of that energy source could undercut the continent's economy. High natural gas prices have already led to higher home utility bills for both natural-gas heat and electricity generated from gas, crimping consumer spending.

Gas prices in Europe are already crushing households and consumers, especially lowincome households, said Adam Tooze, director of Columbia University's European Institute, whose 2018 history of the last decade's financial crisis, Crashed, explored tensions over Ukraine.