Turmoil in global supply chains due to Ukraine crisis may impact economy

2. Aqaba Container Terminal (ACT) copy
(Photo: Jordan News)
AMMAN — The repercussions of the pandemic are still threatening the growth of the national economy, and economic recovery is being exacerbated by the crisis in Ukraine. A number of economists fear that the conflict will affect supply chains which depend on components and goods coming from Russia and Ukraine, and some also say that it may contribute to inflation. اضافة اعلان

In light of pressure from the pandemic and exposure to the possible repercussions of the Ukrainian crisis, some experts are calling for alternative supply chains in order to spare the economy the risks of inflation and high interest rates. Jordan News spoke with a number of economic experts to find out how the Jordanian economy can benefit from the flexibility of supply chains.

 Economist Wajdi Makhamreh said that supply chains which are flexible in terms of cost and ease have a positive effect on the Jordanian economy, both in terms of the flow of imports and in terms of lowering production costs.

Economic expert Hossam Ayesh explained that after the end of pandemic closures, supply chains could not meet increasing global demand either due to overcrowding or inflexibility, which caused a rise in the price of oil and many foodstuffs and resulted in massive global inflation and a decrease in living standards.

Ayesh added that the conflict in Ukraine requires Jordan to change its economic model in order to reduce its demand for imports from distant countries and regions exposed to crisis. He concluded that what is happening globally is a lesson for Jordan and an opportunity to improve levels of food and economic security by reducing the need for long and unreliable supply chains.

 On the other hand, economist Mazen Marji believes that the impacts of the Ukraine crisis are limited. Marji argued that Ukraine does not represent a large volume of Jordan’s imports or production inputs, and that there is enough flexibility in global supply chains to mitigate any negative effects on the national economy. Additionally, imports from Europe to Jordan are less than 2 billion euros per year, and exports from Jordan to Europe are less than 300 million euros per year.

Finally, Marji does not expect sanctions on Russia to affect European production inputs in the near future, minimizing any impact the crisis might have on those limited imports. However, the crisis will affect global oil prices, which will in turn affect Jordan, despite most Jordanian oil imports coming from countries where there are no current disruptions, Marji explained.

Marji said that the most important impact of the crisis on Jordan’s economy may be its effect on Jordanians working in Ukraine or Jordanian investors with projects in that country.

Read more Business