Chairman of National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, and All Karachi Industrial Alliance and Former Provincial Minister Mian Zahid Hussain on Friday said the Russia-Ukraine conflict has started affecting the whole world.
As a result of the conflict, prices of oil metals and food items have started rising while inflation in Pakistan will rise further.
Mian Zahid Hussain said that the government spending will increase due to costly imports and it will need more loans to deal with the situation.
Talking to the business community, the veteran business leader said that oil prices have started rising and according to JP Morgan, its price could reach one hundred and forty dollars per barrel.
As the war intensifies, oil and commodity prices will rise further creating problems for oil and food-importing countries while in Pakistan the burden will be passed on the people.
The conflict will create a global food security problem that will affect billions of people and masses may suffer as the wheat production in Pakistan is likely to decline, he added.
The business leader said that of the wheat imported last year, 39 percent was imported from Ukraine, which may now require alternative and more expensive sources.
Apart from the unforeseen expenditures the increased import bill and widened current account deficit will hamper the economic recovery.
In such a scenario, the central bank may also raise interest rates to reduce demand, cut inflation and save foreign exchange reserves.
Mian Zahid Hussain added that Russia and Ukraine’s total wheat exports accounted for 29% of world exports, Ukraine’s total food export volume was 33 million tons; China is heavily dependent on Ukraine’s maize and both countries play an important role in energy and food security.
The European Union buys 80 percent of its gas and 27 percent of its oil from Russia for its energy needs, and Europe is currently sitting on a powder keg.
Sanctions on Russia would worsen Russia’s economic situation on the one hand, and trade and investment around the world on the other, he said.