War in Ukraine: will the French economy really suffer?

Wheat field in Ukraine (©Nikolay / Adobestock)

“Our agriculture, our industry and many sectors of the economy are suffering and will continue to suffer. Emmanuel Macron set the tone on Wednesday 2 March 2022. During a television appearance on war in Ukraine– insisted the head of state. about the impact of the Russian invasion on our economy.

Will she really affect French consumers, their daily lives and their wallets? “The immediate effects will not be as severe as those of the Covid-19 crisis and the 2008 financial crisis,” said Pierre Jaye, an economist and researcher at IRIS (Institute for International and Strategic Relations) and the Institut Jacques Delors.

We are not going to introduce a war economy and run a deficit. There will be an impact, but not a significant one.

Pierre JayeEconomist and researcher

Small export to Russia

As the researcher recalls, Russia, being a “small economy”, is not the central market for France. “The country accounts for only 1%, 1.5% of our exports. In this respect, French industry and agriculture will be relatively spared.

However, there are direct implications for consumer products to be wary of.

“The main impact will be on energy prices, Russia is an exporter of natural gas. France, with its nuclear power generation, is not as dependent on Russian gas as some of our European neighbors. This represents 17% of our imports (gas only makes up 20% of our energy consumption), much less than in Germany (64%) or the Czech Republic (100%), according to Eurostat.

Market overreaction

But in a domino effect, since we are inextricably linked with other members of the European Union by the free movement of goods, the increase in the cost of energy will be more reflected in products: producers will have to spend more on products and thus pass this increase on prices.

Video: now on Actu

Other points, “the psychological aspect of this conflict and the nervousness of the markets”, according to Pierre Jaye.

This war is overreacting to investors. They are afraid of scarcity, and this fear affects prices. We see this in the example of the barrel, which has jumped in recent weeks.

Pierre Jaye

In addition to the inflation associated with the economic recovery, this situation has a very strong impact on fuel, which continues to skyrocket, breaking record after record.

Russia and Ukraine account for 30% of wheat production

Can we also fear growth in agricultural and food products? “Russia and Ukraine are among the largest producers of cereals in the world (30% between them), the economist points out. It is possible that the import of their products will affect us as well, but how soon, to what extent, it is difficult to say. »

Food wheat has almost doubled since November 2021. Now it is sold on the European market at a price of 435 euros per ton. This increase risks disrupting exports and affecting breeders in particular, but economists agree that the European Union will be far less affected.

Moreover, the EU, one of the largest trading powers in the world, has the ability to manage itself at the agricultural level and does not need Russia or Ukraine for the vast majority of its products.

Deficiencies in certain metals to be wary of

“However, this does not apply to some metals, such as aluminum, palladium, titanium or even nickel, of which Russia is a key supplier for Europe. Manufacturers have reservations for now, but if the conflict continues, as do the sanctions, we may fear shortages in the automotive and aviation sectors…”

Aluminum also broke the $4,000/ton mark for the first time. Copper and palladium hit historic highs.

“Economic Sustainability Plan”

The French government has announced an “economic resilience plan” that aims to help companies and sectors hardest hit by this crisis.

Prime Minister Jean Castex said this Thursday, March 3, that he would support them with specific solutions and according to needs. Meetings are planned for the coming days, in which the social partners will also take part.

Was this article helpful to you? Please note that you can subscribe to Actu in the My Actu space. In one click after registration you will find all the news of your favorite cities and brands.

Leave a Comment