Ukraine crisis likely to slow global economic growth, Yellen says

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© Reuters. A rescue worker stands in the regional administration building severely damaged during shelling as Russia’s attack on Ukraine continues, in Kharkiv, Ukraine, March 25, 2022. REUTERS/Thomas Peter
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WASHINGTON (Reuters) – The Russia-Ukraine crisis is driving up commodities prices and is likely to reduce prospects for global growth in the coming year, U.S. Treasury Secretary Janet Yellen warned on Friday.

Ukraine is a major global supplier of wheat and corn, and prices have surged since Russia invaded its Eastern European neighbor last month.

“We are seeing pressure on commodity prices because of the Russia-Ukraine situation. And it’s importantly oil and natural gas, but also other commodities,” Yellen said in an interview with CNBC.

“And I am concerned about spillovers to countries, for example, that are heavily dependent on wheat. Wheat prices have been soaring. And I think it will likely reduce the prospects for global growth over the next year.”

Yellen said gasoline prices could rise further and that the United States was working with allies to try to cushion the impact on consumers.

“It’s conceivable that they could move higher, but we’re doing everything that we can working with our partners to ensure adequate global supplies to make sure that Europe is well supplied with oil and natural gas, and to protect American consumers to the extent possible,” she said.

Yellen also said the COVID-19 pandemic and the Ukraine crisis have highlighted the need to secure resilient supply chains for companies.

“Maybe American businesses have focused on efficiency and organizing supply chains in ways that lower costs but impair resilience. And resilience of supply chains is a high priority for the administration. To an extent, that will lead to some reallocation,” she said.