Muhammad Suleiman Al-Ankari
The rise in commodity prices globally was not surprising, as had been expected from several reports and studies released by international financial institutions, as it was one of the fallout of the corona pandemic crisis, which led to a sharp decline in the production of food items. And there was a sharp decline. Others, which reduced supply after a rapid and large return to demand with stimulus measures taken by most countries of the world to restore economic growth, but this massive increase in aggregate demand along with money supply It was not accompanied by an increase in production that increases supply to a level that prevents a sharp rise in prices, but the recent crisis of the corona pandemic is not the beginning of inflation, but the 2008 global financial crisis that ignited the inflationary waves And what followed was treatment that raised rates of cheap money supply with near-zero benefits lasting for many years.
With the current Russian war on Ukraine, inflation in food items has increased at a high rate, amounting to 40 percent on wheat and grain since the beginning of the year, as well as energy, especially gas and coal, whose prices have increased from this. There is an increase of more than 300 percent two years ago, and this was after Western sanctions against Russia three years ago. The widespread impact in these increases over the months.
As far as oil is concerned, it was the lowest with an increase of almost 70 percent compared to a year ago, while the problem of high fuel prices is affecting the production of refineries in the Western world, especially Europe and America. is in decline. , as a result of environmental regulations in addition to higher taxes on gasoline, diesel and other oil derivatives, i.e., crude oil prices are not the cause of these increases, and production volumes are sufficient to meet demand, even though westernized. The sanctions against Russia, one of the world’s largest oil and gas producers, whose oil output came with the sanctions fell 9 percent, as Reuters reported two weeks ago.
However, it is known that major crises result in many changes, the most important of which are the cultures of countries and peoples with respect to their economic patterns, plans and cultures. The blockage of certain goods from the market or the decline in their production, which causes an increase in their prices, can only be overcome in a number of ways, the most important of which is the orientation to internal production according to the capabilities of each country, with To diversify the sources of import of these goods.
Inflation does not depend on fiscal and monetary policies, as it can produce quick results, but it often does not fundamentally treat all symptoms. As for the real remedy, it is to increase production and diversify it, which increases supply at higher rates than the growth of demand. They are also a catalyst for a macroeconomic, scientific and research renaissance to prepare for any crisis. In the future, especially since the world suffers from chronic diseases in its economy and even political files and other aspects such as allowing recurrence of crises in less time. Which now exceeds $300 trillion, nearly three times global gross product, which represents a greater risk of the debt bubble bursting in the future. In 2017, the global debt volume stood at $184 trillion, that is, in five years, it more than doubled by more than 60 percent, while the global economy grew by no more than 15 percent in the same period.
These loans, which grew with shorter interest periods, greatly increased inflation, as credit growth and relatively rapid cash demand in some years did not match a reasonable increase in the production of goods, and this was a nearly pandemic year 2020. During the sustained and forced decline, and other factors overlapped with it, most notably sanctions against Russia, one of the world’s largest commodity exporters.
But the change will not stop at the limits of the orientation of countries to increase their investments to raise production rates internally. Rather, change will happen by modifying their consumer culture up to the consumers. Global price hikes won’t be a quick fix. This will take some time. The time that many countries and international financial institutions have estimated is about two years, and so the consumer will have to review it, compare it’s expenses, determine its needs, find the best prices, And will compare the types of brands of each product. prices. They often tend to rationalize and reduce waste by rethinking their actual consumption and estimation of the need for each item, in addition to the tendency to save as much as possible, as the consumer has many ways to rationalize its consumption. , because technology helps him to know the prices in all the shopping centers that publish the goods linked to their prices, as well as promotional offers. There are many global models for people to control their consumption as much as necessary and minimize any exaggeration of consumption or they turned to luxuries, and that was after the economic shock that their countries experienced, in which High inflation rates were also involved.
Crisis from its womb creates investment opportunities, and in turn, it is a turning point and a turning point in transforming the cultures of peoples and countries into different behaviors and trends. Just as the corona crisis changed many cultures of people taking their precautions to protect their health, it directed a lot of money to invest in medical research as well as the production of drugs and medical equipment, and high inflation. At present, this will have an impact on the cultures of consumer peoples and on countries’ attitudes towards achieving themselves. – adequacy in basic goods or a large percentage of their consumption, which map international trade, its volume and investment trends, and between countries to meet and overcome crises in order to achieve integration and cooperation between economic blocs Will replace Uday.