Russia’s invasion of Ukraine began in February 2022 and, currently, continues to affect energy, trade and financial markets globally. But, do you know what are the consequences of the Ukrainian war in Spain? Below, we explain the impact of this conflict in our country.
What impact does Russia’s invasion of Ukraine have on Spain?
In general terms, experts assure that a slowdown in the Spanish economy will be noticeable, as well as higher inflation levels. In addition, the main consequence today is an increase in raw materials such as oil and gas.
The price of gas and oil
Taking into account that Spain is not a gas and oil producing country, we can say that both resources are the main factor impacting the Spanish economy. According to Business Insider, the day the invasion of Ukraine began, the price of gas shot up by 30% and oil climbed to 100 dollars per barrel.
In addition, we know that gas provides electricity not only at the commercial level but also in Spanish households, which are currently affected by an increase in their monthly energy bill of about 17%.
On the other hand, Russia is one of the main oil exporting countries (OPEC+) and it is estimated that almost 5% of Spain’s oil imports come from this nation, which means, once again, a price increase that affects the commercial sector in Spain.
The increase in the price of petroleum, therefore, leads to an increase in transportation prices, as well as in air fuel, which can result in long-distance trips being penalized due to the high cost involved.
In the same vein, electricity supply in Europe is expected to continue to increase if the war continues, since Russia is the largest gas producer and approximately 40% of the gas used in the European Union comes from that territory.
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The agri-food sector in Spain
Another of the consequences of the Ukrainian war in Spain is the agri-food sector. Ukraine is one of the main wheat exporting nations worldwide, so much so that the Ministry of Agriculture, Fisheries and Food estimates that in the case of corn there is an average import of 2.7 million tons per year to Spain.
Similarly, around 60% of Spain’s sunflower oil purchases abroad come from Ukraine.
During the second month of the war between Russia and Ukraine, the Ukrainian Prime Minister, Denys Shmyhal, announced that exports of products and raw materials would be restricted in order to have them available in the national territory.
In addition, an order was published suspending the export quota concerning meat, wheat or oats.
Likewise, it is understood that, by paralyzing sales of corn, sunflower, wheat flour and sunflower oil in Ukraine, an impact is generated on international quotations of raw materials destined for animal feed.
Juan Vázquez Rojo, researcher in European Economy and Political Economy at Camilo José Cela University, explains that Spain’s dependence on Ukraine for these raw materials will generate a price increase in certain foods, such as olive oil.
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While it is true that Ukrainian tourists vacationing in Spain are not a large number annually, in the case of Russian tourists we cannot say the same.
Therefore, in relation to tourism we note that it is another aspect that is affected in the Spanish territory after the war in Ukraine, since Spain represents the fourth country in the world to which Russia sent more tourists.
In this sense, over the years, the visit of Russian tourists has meant an important income in the Spanish economy; and the data confirms this in 2019 when the country received more than 1.8 million Russian tourists who spent around 2 billion euros in Spain.
And, according to data from the National Institute of Statistics (INE), the Community of Valencia, Catalonia, the Balearic Islands and the Canary Islands will be the main regions that will feel the economic impact of the absence of Russian tourists, since their tourist sites are preferred by Russians.
Finally, it is important to mention that, in addition to the tourism factor, Spain is also the fourth country in which the Russian population made most of its real estate purchases, which shows a negative effect on the Spanish economy.
However, both the Spanish Government and the Ministry of Industry, Trade and Tourism are proposing a plan to mitigate the direct impact of the absence of Russian tourism and to strengthen its activity with European markets, the United States and Latin America.
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The consequences of the Ukrainian war in Spain may continue to unfold as the conflict with Russia continues, so the best alternative is not to lower our guard and prepare the country to be able to face any type of financial, political, commercial or energy crisis.