It has been a year since Russia launched its catastrophic attack on Ukraine which sent shock waves all across the world.
Marking one year of the invasion, the Government announced one of its largest rounds of sanctions against Russia to date to show New Zealand's strong condemnation of the country's illegal action.
While the devastation of the invasion in Ukraine continues to be at the forefront, the war has also had economic impacts on New Zealand.
ASB's chief economist Nick Tuffley said the direct trade ties New Zealand has with both Russia and Ukraine are "very minimal" - but it has indirect ties which are crucial.
Russia was New Zealand's 27th largest export trading partner in the year ending June 2021 with goods exports totalling $293 million, 0.5 percent of New Zealand's total, according to the Ministry of Foreign Affairs and Trade. While the most recent data shows New Zealand's total trade in goods to Ukraine was $22 million in 2017.
The largest economic impact on New Zealand's economy is therefore mainly indirect.
The invasion contributed to the country's soaring fuel prices and increases in food costs during 2022, but, fortunately, economists say those impacts have now mostly eased.
Impact on commodity prices
Tuffley said there are two key ways the invasion impacted the NZ economy, the first being imports becoming more expensive.
For New Zealand, Russia's invasion of Ukraine saw the three F's rise in price: Fuel, food and fertiliser.
Russia was the world's largest exporter of oil to global markets and the second largest crude oil exporter, according to the International Energy Agency.
For many countries, the invasion meant they had to source their oil elsewhere, creating pressure on global refineries.
This was reflected in petrol prices which started to soar in March last year.
ANZ's chief economist Sharon Zollner said the closing of New Zealand's only oil refinery, Marsden Point, also meant we were "more exposed" to disruptions in supply.
The pain at the pump also contributed to inflation in New Zealand, causing the Government to ultimately slash fuel taxes and halve the cost of public transport. After a few months, prices started to ease but it's worth noting the fuel tax will be re-added this year - which could be a nasty shock for many.
"Oil prices have cut back down since but there is that potential, always, for them to spike up," Tuffley said.
The invasion also caused upwards pressure on food items.
Prices for grain saw an increase, as Russia is the world's largest exporter of wheat and Ukraine is the fourth biggest. However, Tuffley said that too has come back down.
"Between Ukraine and Russia, they account for upwards of a third of all exported grain. So for countries that rely on imports of things like wheat, corn, barley, those people who have been drastically importing those have been paying a lot more."
Those prices flow on through to farm feed. While New Zealand imports most of its feed from Australia and South East Asia, pressure on prices in the global market raises the prices from these suppliers as well.
Zollner said fertiliser prices are also starting to trend down now.
Both Russia and Belarus are important fertiliser producers and exporters, meaning the sanctions imposed on their exports had an impact on global supply, driving up the price.
President of Mid Canterbury Federated Farmers and arable farmer David Clark told Newshub in April 2022, farmers have seen a 200-300 percent increase in fertiliser costs so far.
While fertiliser prices have been rising anyway as energy prices are rising, Clark said Russia invading Ukraine has made that "much, much worse".
These prices have eased off their historic highs over the past 12 months.
Impact on global economic activity
While Russia's invasion of Ukraine has not had a huge impact on New Zealand trade, for many of our key trading partners the impact was far more significant.
Russia is the European Union's fifth largest trading partner with exports of USD$89.6 billion in the year ended December 2020.
"It's how the growth in our key trading partners gets affected by the war and in particular the flow on effect in higher energy prices," Tuffley said.
"If some of our key export markets, like say Europe, get weak economic growth because of the war then that's likely to filter through and have some impact on how much of our exports they are compared to buy."
Europe's energy system faces an unprecedented crisis, largely due to a lack of access to Russian gas.
Across Europe, electricity costs spiked some 70 percent in the first six months of the war and gas bills nearly doubled, according to the Household Energy Price Index.
Zollner said the biggest impact from the invasion was on gas, however, she said New Zealand fortunately wasn't as exposed to the crisis.
"We were quite sheltered from the energy shock," Zollner said.
What happens if the war ends?
If the war in Ukraine came to an end this year, it doesn't necessarily mean the economy will bounce back to where it was before, economists say.
"We tend to find that some of the price impacts that we directly bear would potentially be eased. So you expect it would help grain-related prices to come back down a bit further and potentially take some of the pressure off fuel prices," Tuffley said.
However, he said with Europe looking to wean itself off relying on Russian fossil fuel and looking towards alternative energy sources fuel and the energy prices could stay elevated.
But, the impacts on the economy will largely come down to how the war ends.
"It would be a question of how it ended and what the consequences of that were," Zollner said.
If it ended in a way of leaving everything on edge and the sanctions remained in place then the impacts on the global economy could largely stay.
