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Health & Fitness

Ukraine - Economic Impact

One of most dominate stories over the last several months, and especially the last several weeks, has been the unrest in the Ukraine. Beginning with protests against a government that many believed to be corrupt, and evolving to a complete overthrow of the leadership, the unrest and instability have recently taken unexpected turns. After the former president fled from Kiev to Moscow, Russian military forces began to pour into the region of the country known as Crimea. Crimea has substantial significance for several reasons – the historic Yalta conference (attended by Stalin, Churchill, and FDR) was held in Yalta, which is located in Crimea. Additionally, the Russian Black Sea Naval force has a major base located on the peninsula. Last, but certainly not least, the Crimean region is the one region in the Ukraine with an ethnic Russian majority, and a majority of Russian speakers.

Obviously, the geo-political implications of these events have been well studied and continue to be covered, but what about the economic impacts?

The crisis in the Ukraine is poised to have several financial impacts, such as:

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1) Ukraine is one of many emerging markets that have become unsettled since the Federal Reserve has begun its tapering process. Speculation has begun that as this country experiences deep economic recession, it could kick off the same process is other exposed marketplaces.

2) The E.U. is dependent on Ukrainian grain and corn exports, as is much of the world. The nation is a top exporter of these two food staples, and a disruption in these industries could increase prices, in addition to price increases that have already occurred.

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3) Obviously, the Russian and Ukrainian economies are highly interconnected, with Russia holding large swaths of Ukrainian debt. Additionally, large quantities of oil and natural gas destined for Europe pass through the Ukraine on their way to Europe.

Unrest and disputes on the other side of the world, literally, can certainly have an impact on economic news domestically as well as on your personal finances.

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