George Lagarias, Chief Economist at Mazars has commented on why he thinks that the Bank of England should be worried about Russia.
George Lagarias, Chief Economist at Mazars comments: “Whether we like it or not, Russia is very important for the global supply chain, due to its status as a major energy supplier and commodities exporter. And the question is not how we will think about things long-term, but how commodity traders and corporates will react over the shorter term. Will they try to hoard commodities and energy, fearing fresh instability out of Russia?
“A running theme since the beginning of the year for us was increased uncertainty and unpredictability, in a world that shows no signs of returning to its pre-pandemic balance. While we don’t know what happened, we should not be surprised if we see upheaval in the commodities market, as investors fear further destabilisation.
“Further instability could, in theory, add to inflationary pressures, at a time when we at least thought that supply chain issues were behind us.
“Sticky inflation is probably the key risk for 2023. The biggest economic and financial concern from further Russian instability is that supply chain breakdowns could lead to a fresh inflationary cycle, at a time when we are not nearly done fighting the previous one.”
