THE ISSUES ON ECONOMIC DEVELOPMENT IN ARMENIA IN THE CONTEXT OF THE RUSSIAN-UKRAINIAN CONFLICT SPILLOVERS

Abstract

The Russian-Ukrainian War, started from February 24, 2022, dealt a serious blow to the recovery of the world economy and caused quite complex social and economic problems, which was a serious challenge to the world economy after coronavirus pandemic. In addition to the immediate humanitarian consequences, the Russian-Ukrainian war will clearly delay the recovery process of the global economy, slowing down economic activity, exacerbating supply and demand tensions, damaging consumer sentiment and further boosting inflation rates around the world. While high commodity prices were just one of the risks already identified as potentially derailing the global economic recovery, the escalation of the conflict raises the possibility that commodity prices will remain higher for much longer. In turn, it increases the risk of prolonged high inflation, thereby increasing the risks of stagflation and social unrest in both developed and developing countries. As it is known, Russia is the main trade partner of Armenia, in the first place in terms of export, import, as well as in terms of received cash flows. Accordingly, the effects of the Russian-Ukrainian war on the Armenian economy will be reflected in a number of directions, including a decrease in exports, a reduction in remittances, an acceleration of inflation, and a slowdown in economic growth.