The uncertainty will remain high, yet opportunities are there

Russia ranks 11th in the world in terms of GDP with $ 1.57 trillion, but this ranking does not reflect its enormous wealth of the country. If Russia stops supplying its raw materials and agriculture to the rest of the world, then is likely global economy will be heading for a recession as dozens of other products that are the cogs of a giant supply chain will be in short supply.

In such a scenario, commodity prices will remain high with an upward trend thus central banks will be forced to flood the economy with liquidity. In fact, if citizens find it difficult to get fuel and food, a new round of printing will begin so that governments can support them. Money printing, however, cannot produce raw materials and agriculture so their prices will remain high. With commodity prices at high levels, a recession is very likely, and to deal with it will need to create even greater debts.

Central banks will have to choose between recession or inflation. Although the appearance of one does not necessarily mean the elimination of the other. The US is likely to raise interest rates to curb inflation, but this will slow down GDP growth while creating tightening in weak sectors of the economy as well as the US-linked economies. Europe, although more inflationary due to higher energy costs than the US, will follow the rise in interest rates but not to the extent that the US will do, since countries such as France, Italy, and Spain cannot accept high-interest rates hikes given their high debt to GDP.

In addition, the new situation created by the war on European soil will lead EU countries to increase their defence spending, which is likely to lead to the removal of the 3% government deficit threshold for the Eurozone Member States to finance their defence equipment. This in combination with the fact that military operations are taking place in Europe makes the euro weak against the dollar.

In such an environment, investments in agricultural goods and raw materials seem attractive, however, the variability in the above will remain high for a very long time as it will be constantly affected by developments in the geopolitical situation.

On the other hand, the sectors that become attractive but also relatively stable are those that concern the defence industry and high technology companies in the US and Europe. The defence industry because defence spending is becoming more urgent than ever. High technology, because geopolitical instability makes it imperative to develop hi-tech companies from digital transformation to robotics, no longer in Asia but mainly in Europe and America.