Russia’s invasion of Ukraine, which began over three weeks ago, has had a devastating impact on the Ukrainian people. Now, the economic ramifications on the rest of the world, including Australia, are beginning to unfold.
The most obvious impact on Australia so far has been the rise in petrol prices which have soared to all-time highs of $2 per litre with this set to get worse with analysis by JP Morgan indicating prices could edge towards $2.70 per litre.
The longer the war continues, the more likely it is there will be further impacts on Australia. But in what ways?
Job market outcomes so far…
We are already experiencing some effects of the conflict on the job market. ALRA Recruiter Jon Riley said, “I had two deals that fell through because of the war”. This can be attributed partly to a dip in economic confidence as many companies are now looking to play it safe and aren’t pursuing expansion. There are also a number of multinational businesses that have hastily withdrawn from Russia, causing them to have a sudden loss of revenue. It’s possible that the hot job market we’ve been experiencing might be beginning to cool.
Sanctions imposed by the Australian government on Russia (along with countless other countries) will also have an effect on any Australian businesses who import products to Russia or import from Russia.
Projected impacts of Ukrainian war on Australia
This insightful ABC article indicates how Russia’s invasion will impact Australia financially. It explains that “Like us, (Russia) is a major exporter of food, energy and minerals and its ejection from global trade flows, if the sanctions continue to hold, directly will benefit us, at least as far as the national balance sheet goes.” So in terms of trade, there are a number of potential benefits for Australia.
The article continues, however, to explain that “When it comes to individual hip pockets, we’re all likely to be far worse off.” This is due to the aforementioned petrol cost rises, as well price rises for other commodities Russia has been a significant exporter of, including essential items such as bread.
Regarding the job sector and earnings, there has been a long period of little wage growth in Australia and unfortunately this may end up remaining the case. The pandemic saw a rise in candidate bargaining power due to a skills shortage. However, the majority of candidate shortages are expected to soon be accounted for, due in part to our borders reopening.