War is one of the prominent factors that have a catastrophic impact on businesses and the world economy. Over the years we have witnessed the eruption of wars that have a direct impact on the global economies and the Small enterprises along with the multinational corporations.
Moreover, War in any form, whether it's a direct invasion or a proxy leads to massive destruction. As I have witnessed recently, Before the eruption of the Russia-Ukraine war world had just surpassed the economic recession due to COVID-19. Soon after the world's economies and businesses started growing, the Russia-Ukraine war hit the businesses and economies across the globe again but this time in a decisive manner.
As soon as war broke out, one of the major sectors that was badly affected by the shocks of the war was business. The business of small enterprises along with MNCs started shrinking with the war. MNCs folded their sleeves and left that region that has uncertainty or suffering from the shocks of the war. On the other hand, small enterprises played the game of survival as they didn't have enough equity to move out. Small enterprises record less loss as compared to the M.N.C. as Small enterprises hold a limited market share (Sources IMF).
Businesses require a special atmosphere for their growth and productivity. War and business can't slide at the same moment. Businesses require certainty in every factor such as certainty in government policies, certainty in Fiscal policies, certainty in Monetary policies, and certainty in a country where companies are operating.
In a war-affected country, new investors never pay a look to start their new venture. Rather than, the running enterprises prefer to switch their location for the sake of their business productivity. In war-affected regions, MNCs started losses their shares in the form of capital resulting in an ultimate loss for the company.
Not long ago, when Russia invaded Ukraine, worldwide Oil prices started surging within no time. The world has witnessed a sharp incline in oil and gas prices over the uncertain future of the global oil supply. Russia is the biggest exporter of energy products to the global market, and the eruption of the war between Russia and Ukraine means that the global energy supply line would be halted or disturbed for the months to come. Oil and gas supply chain disturbance by Russia has badly impacted the global economies. One of the major examples in that scenario is; How this war has slowed down the economic growth of the top global economies and businesses.
Mcdonald's one of the major food chain brand located in over 150+ countries has been impacted by the shocks of this war between Russia and Ukraine. Mcdonald's recorded a loss in capital revenue for the first time since 2014 when Russia invaded "Crimea" and was sanctioned by the United Nations. This is a single example of MNC “how it has been affected by the war eruption”. There are plenty of examples on cards where running enterprises start dwindling with the eruption of the war.
When it comes to the point of how the world's economies face the wrath of the Russia-Ukraine war, we have an example of the world's top economies; like Germany, the USA, the UK, and the other European countries. Germany is one of the major country that has witnessed the economic growth for the first time since the recession of 2009. For the first time, the German economy recorded a negative growth of -0.4% during the fiscal year 2022-2023 according to the report of IMF and Worlds Bank.
German economy hits hard by the Russia-Ukraine war because of the few factors listed below
Germany’s dependency on Russia for Oil and gas
Germany's core component of economic productivity is the manufacturing by the industries that require oil and gas for their production.
Halt of energy distribution channel named Nord Stream-2.
“Nord stream-2 is a direct gas pipeline between Russia-Germany”
Apart from Germany, the world's top economies like the UK and France also affected by the shocks of the war between Russia. UK and France have witnessed growth of 2% and 3% respectively for the first time since 2009. This War has mounted the inflation rate worldwide as Both war-affected countries are the major contributors of energy products and cereals to the global market.
With the disturbance of Oil and gas products supply to the global market, the world's economies knees down. Import bills of the countries surged to a new level that has driven the economies towards a downward trend. Disturbance in oil and gas products supply also drives global inflation to a new level.
Even the USA, the world's superpower recorded GDP growth of 4% during the last fiscal year according to IMF with the CPI inflation rate at 7%. The rise in inflation forced the FED to raise the interest rate to a new high of 6% to tame the inflation. However, the rising interest rate means doomsday for businesses and enterprises as the rising interest rate not only restricts the MNC from borrowing the debt at a higher rate but also slows down the world's economy.
The same sort of thing happened back in 1939 and 1914 when the world witnessed the War that resulted in the destruction of the Businesses and the economies within no time.
Conclusion:
War has a major impact on different sectors of the globe along with the business and world's Economy. Shedding of blood in a war is not a negligible factor as well. The world needs to step forward to cease the conflicts in favor of peace and business growth. As growth of businesses and economies ensures the prospective of the human being worldwide. Businesses and global economic growth can change the perspective of the whole world if the Global Powers choose to favor all rather than protecting their individual goals.
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