The conflict in Ukraine could have both positive and negative consequences for South Africa, said Azar Jammine, director and chief economist of Econometrix.
Russia is a major supplier of gas and oil to Europe. After Russian President Vladimir Putin sent troops to two rebel regions of Ukraine on Monday, energy prices skyrocketed.
As a result, global inventories fell and the oil price rose. Jammine said this would normally lead to the suffering of emerging markets.
South Africa, however, held out.
One of the reasons for this, he says, is that commodity prices have risen.
“The raw material prices are holding up well. Even before the events leading up to today, oil was doing well,” said Jammine.
The conflict between Russia and the western powers is causing a shortage of minerals, such as palladium and oil. This will be good and bad for South Africa.
“The shortage of palladium will benefit South Africa. However, the shortage of oil will lead to an increase in fuel prices,” said Jammine.
South Africa could also benefit from price increases for copper, coal and other platinum group metals such as rhodium. The price of gold could also rise, Jammine said.
However, the economist added that South Africa’s economy will suffer in the long run if war is declared between Russia and Ukraine.
“Overall, global economic growth will suffer and South Africa will be affected. But for now, the country is benefiting from the increases in raw material prices,” says Jammine.
Japan said on Wednesday it would impose sanctions on Russia after Moscow ordered troops to invade Ukraine’s rebel republics. The decision follows similar measures taken Tuesday by the United States, Britain and the European Union.
Also on Tuesday, German Chancellor Olaf Scholz said approval of the NordStream 2 pipeline from Russia would be suspended in response to Putin’s decision to send troops to Ukraine’s breakaway regions.