Bloomberg News reported on the 27th (local time) that consumers around the world are cutting back spending as prices of various resources such as food, fuel, and metals soar beyond their control. Bloomberg predicted that if this phenomenon continues, it could fall into an economic recession.
Since Russia’s invasion of Ukraine, almost everything from oil prices to food has soared, threatening the global economy.
International Monetary Fund President Crystalina Georgieva expressed concern that the risk of an economic recession is increasing in more and more countries.
In developed countries, rising energy and food costs are expected to reduce unnecessary consumption such as eating out, traveling, and the latest smartphones.
Europe, which relies heavily on Russia for energy, faces greater risks than the United States. Natural gas prices in Europe are six times higher than they were a year ago, and electricity prices are almost five times higher.
Experts are warning of a “demand collapse” in which high prices in oil, natural gas, and electric vehicles continue to decline for a long time.
JPMorgan pointed out that if oil prices persist for a long time, demand for oil may collapse. JPMorgan predicted that global oil demand will decrease by 1.1 million barrels per day in the second quarter and 500,000 barrels per day in the third quarter, respectively. He also added that most of the decline in demand will be in Europe.
Gasoline retail prices in the U.S. easily exceed the national average of $4 per gallon, and in Los Angeles, they average more than $6 per gallon.
Morgan Stanley pointed out that the price of lithium, a battery material, will soar, forcing electric vehicle companies to raise prices by 25%, which could lead to a collapse in demand. Lithium prices have risen nearly 500 percent from a year ago.
