Economists have expressed fears of an increase in the inflation crisis that the world is experiencing due to the effects of the Corona pandemic and the war in Ukraine. Global inflation has reached a level not seen in decades, leading to a significant rise in the prices of services and basic goods in multiple countries.
The global economy is experiencing levels of inflation not seen in decades, with prices of essential goods and services such as food, heating, transport and accommodation rising. Although peak inflation may be on the horizon, its effects could get worse.
Economic consequences of the pandemic and war
A long and comfortable period of limited inflation and low interest rates came to an abrupt end after the coronavirus pandemic hit the world, as governments and central banks continued to support closed businesses and households with trillions of dollars.
This "lifeline" prevented workers from joining the lines of benefits, businesses from collapsing, and house prices from falling sharply. But it has also disrupted supply and demand in an unprecedented way.
By 2021, as lockdowns end and the global economy grows at the fastest pace after an 80-year recession, these massive stimulus package funds have cast a shadow over the global trading system.
Factories that were shut down could not operate fast enough to meet demand, COVID-19 safe rules caused labor shortages in the retail, transportation, and healthcare sectors, and the recovery surge sparked higher energy prices.
Russia invaded Ukraine in February and Western sanctions on the largest oil and gas exporter sent fuel prices high.
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Economics