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Economies are Resilient by Paolo Di Gaeta

s soon as the ussian led war in kraine began on February , , analysts of every description
were predicting disaster.

The worst scenario envisaged: economic “First of all,” he explains, “because this conflict hand, we must not let the rise in the price
activity would plummet with a dire scarcity of has remained in a confined territory far from of consumer goods get out of hand to the
energy, food and raw materials. All this would the world’s trade zones, and secondly because point where potential buyers can no longer
inevitably lead to mass unemployment in the it was observed early on that economic afford them. But, on the other hand, the anti-
industrialised countries, with attendant social operators were able to set up global bypass inflationary remedies, i.e. the rise in the key
unrest, and terrible famines on the African circuits, getting supplies of the raw materials rates of the central banks, which determine
continent and in the Middle East. and energy resources that they used to buy the cost of credit, must not exceed the point
But in the spring of 2023, after more than a from the war zone where nothing could leave, beyond which the States and companies can
year of a conflict that has been as deadly as it either because of the blockade or because of no longer borrow for investmen, in order to
has been destructive in the country concerned, the sanctions imposed on Russia. ensure a satisfactory level of activity. We must
the situation is far from the doom and gloom not repeat the excessive austerity of post
predicted. As long as inflation is kept under control 2008 that attempted to resolve the so-called
There has been no recession, no power cuts One negative consequence that had been subprime crisis too quickly. It would be all
during the winter, no shortage of gas, oil predicted and that did indeed materialise the more inept to ignore the mistakes of the
continues to arrive at a lower cost per barrel was the sharp rise in inflation. On average, past when, for the current year and beyond,
than at the beginning of last year, and finally it is around 8% in the euro zone, with much the forecasts of the central banks and the
Ukrainian and Russian cereals are exported in higher peaks for certain goods: 16% for food OECD are good with regard to the economic
very large quantities following an agreement and 25% for energy. And here again, these are situation and growth prospects in practically
on this point between the warring parties. only the calculated averages. all parts of the world.
Paolo Di Gaeta, a specialist in international “In fact, this is where the real danger to growth
finance, was never one of the fearmongers. lies,” comments Paolo Di Gaeta. “On the one Geopolitics and Economics
But of course, all these considerations would
be meaningless if the conflict were to go
beyond its current limited geographical area.
The great fear in this case is the attitude of
China, Russia’s “official” friend, in the time
to come.
Paolo Di Gaeta has never believed in this
catastrophic scenario, and he has a strong
opinion on this. “Unlike Russia, China has fully
embraced international trade, and its entire
economy depends on it. North America and
Europe are its main customers and suppliers.
Beijing could not therefore ensure its activity
and provide a decent living for a population of
1 billion 300 million inhabitants if its partners
were to suffer sverely from a bad economic
situation, which would be the case if the war
were to spread.
In contrast, the writer does not agree with
the “go to war” attitude, believing that the
best thing for the future would be a complete
collapse of Russia: “The country has an insane
nuclear arsenal spread throughout its territory.
© Depositphotos/KirillM emergence of several entities, horribly similar
A total implosion of Russia could provoke the

to North Korea, with all that this implies, thus
making geopolitical harmony an impossibility.

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