Overview
Higher costs and further disruption to supply chains are the immediate global economic impacts of the war in Ukraine, according to Fidelity International’s latest monthly Analyst Survey. Of the 147 analysts surveyed worldwide, some 82 per cent rank higher cost inflation as a major second-order effect of the war, while about two thirds cite deteriorating supply chains.
Another key effect observed is reduced sales. Decreased investment and higher sales/prices rank as smaller impacts.
“There is more concern about raw material inflation and pressure on margins,” says one industrials analyst covering China.
As Russia and Ukraine account for a substantial part of global agriculture, the war has also dealt “another input cost hit” to companies relying on those commodities, a fixed income analyst covering consumer staples in North America notes.
Consumer staples and telecoms are the two sectors where all analysts see cost inflation as a key effect of the war. In the utilities sector, analysts highlight supply chain disruptions but also increased interest in switching to renewables on energy security grounds. An equity analyst covering the sector in North America notes that there is evidence that Europe will accelerate its transition to clean energy to cut reliance on Russian supply.
Unsurprisingly, energy and materials are sectors that may see some positive second-order effects of the war, with about 60 per cent of analysts in these two sectors selecting “higher sales or prices” as a main impact.
“Excluding Russia, the majority of companies will be benefitting from higher commodity prices but with higher cost inflation also,” says an equity analyst covering mining in EMEA and Latin America.
Elsewhere in the survey, Covid-19 emerges as the most commonly cited reason for supply chain disruptions, a reminder that global logistics were already under historic pressure before the war in Ukraine began.
