February the 28th, 2022 - Some Croatian companies will end up feeling direct consequences as a result of the recent Russian invasion of Ukraine, and as the situation continues to escalate in that Eastern European county, it's difficult to predict how hard those consequences will be to deal with.
As Poslovni Dnevnik writes, Petrokemija, Ad Plastik, Prvo plinarsko drustvo (PPD), Span, Jadran Galenski Laboratorij, Fortenova Group and Sberbank… are just some of the business entities that will be directly affected by Russia's attack on Ukraine, Vecernji list reported.
Last year (during eleven months), Croatian companies exported goods worth 1.36 billion kuna to Russia and 362 million kuna to Ukraine. The value of imports from Russia doubled in one year, to 3.3 billion kuna, probably due to the significantly higher prices of energy, gas and fuel.
Imports from Ukraine stood at around 280 million kuna. When it comes to gas, Croatia is entering a precarious group of countries that are heavily dependent on Russian gas imports, which are still flowing underground while Russian boots spend their time trampling all over everything on neighbouring Ukrainian soil.
Only about one percent of Croatia's merchandise exports go to Russia, so the eventual loss of part or all of the revenue will not result in any shocks or a recession, but it would certainly be a blow to Croatian companies that have struggled for years to be present on what is typically a very difficult market.
The blow to Croatia and Croatian companies will come indirectly, first through inflation and the spillover of the costs of the war on energy and food. The annual inflation rate in Croatia is already at almost six percent, and food and energy are its big generators. Croatia is dependent on imported gas (imports 70 to 75 percent), oil and electricity, but also food.
Russia and Ukraine hold a quarter of the world's entire wheat production, a fifth of the corn production and four-fifths of sunflower oil production. Ukraine is the world's largest producer of sunflowers and potatoes, the sixth largest producer of corn and barley, followed by rye and soybeans, which immediately raised prices on agricultural commodity exchanges.
In addition to higher prices, shortages are possible, which will work to dispel dreams and plans about inflation as a short-term phenomenon that will dissipate by summer and which could be responded to with a one-time package, no matter how expensive that package of measures might be. While waiting for technical instructions and details on sanctions against Russia, Croatian companies are currently putting out the fire, writes Vecernji list journalist Ljubica Gataric.
For more, check out our business section.
