COST OF LIVING/Economic experts warn Ukraine crisis could cause inflation in Taiwan

02/23/2022 06:07 PM
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CNA file photo
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Taipei, Feb. 23 (CNA) With oil prices already driven higher by tensions between Russia and the West over Ukraine, economic experts in Taiwan have warned of a spike in import prices should the situation deteriorate further.

The Directorate-General of Budget, Accounting and Statistics said that the current crisis - which saw an escalation Wednesday after Moscow recognized and ordered troops into two self-proclaimed separatist republics in eastern Ukraine - could have a knock-on effect on commodity prices and inflation in Taiwan.

Chang Chien-yi (張建一), president of the Taiwan Institute of Economic Research (TIER) said the effect of Western sanctions on Russia appeared limited but worthy of further observation, while warning that a full-scale invasion could drive up the price of bulk agricultural goods, such as wheat and corn, of which Russia and Ukraine are two of the world's major suppliers.

Taiwan's Council of Agriculture (COA) will increase inventory and domestic production and has secured sufficient wheat and corn supplies from February and August to keep prices stable, COA chief Chen Chi-chung (陳吉仲) said Wednesday.

U.S. President Joe Biden on Tuesday (U.S. time) announced new sanctions on two major Russian banks over the Ukraine crisis, while the European Union also agreed to impose an initial round of economic sanctions the same day.

Meanwhile, the Chief Investment Office (CIO) of DBS Bank said Wednesday in its weekly bulletin that the risk of economic contagion from the Ukraine crisis is low given that Russia accounts for only 1.8 percent of global gross domestic product but the Russian movement could push up oil prices.

"Europe relies on Russia for 40 percent of its LNG demand through pipelines across Europe, and supply could be disrupted due to sanctions on Russia and political unrest in the region," according to the CIO report.

It said the gas market was already very tight in Europe this winter and any further impact to gas pipelines or imports could result in even higher energy prices.

(By Pan Tzu-yu, Yang Su-min and Evelyn Kao)

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