For the most part, recessions are caused by a complex interaction of output, employment, prices, costs, productivity, interest rates and credit, among other variables, rather than a single external shock such as a spike in oil prices.But a sudden rise in the price of oil, or some other shock, can act as the tipping point if the business cycle has already become susceptible to a downturn, as was probably the case at the start of 2022.
THE longer the war goes on, the greater the chance of an economic recession, according to the chief executive of commodity trader Vitol at a business leaders’ conference organised by the Financial Times recently.
Recession risks were already elevated before Russia’s invasion of Ukraine and the subsequent surge in commodity prices and disruption of supply chains has worsened the adverse economic trends.
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