SUPPLY chain disruption and higher commodity prices caused by the war in Ukraine are expected to last beyond the end of the year, according to a global economic forecast.

Economist Intelligence Unit analysts say the conflict will continue “at a high level of intensity” for at least the next six months, before settling into a protracted stand-off with periodic flare-ups.

The decoupling of the Russian economy from its European neighbours is not expected to be total, with Moscow only partially cutting off gas supplies “to keep Europe guessing”, however economies in central and eastern Europe — most notably Germany — will be exposed.

Further supply chain disruption is on the horizon if there is a decoupling of the Chinese and US economies. If this happens slowly, the analysts suggested, solutions might be found. However, significant disruption would follow a rapid break in relations.

Further disruption would be caused if conflict were to erupt between China and Taiwan. It was observed that tension would heighten in the early 2030s when the Chinese economy overtakes the US economy to become the world’s largest.

Analysts said the global economy was continuing to rebound after pandemic enforced lockdowns, but the picture for 2023 was not good, with low growth expected in China, the US and European Union.

Global growth this year is forecast at 2.8%, down from a pre-war forecast of 3.9%. It means the war in Ukraine will shave $1trn from global gross domestic product this year.

Meanwhile, the conflict is expected to heighten the prospect of food insecurity, especially in emerging countries that rely heavily on Russian and Ukrainian grain supplies, especially Turkey and Egypt.

The fighting and the blockade of Ukrainian ports by Russia have halted exports of grain, and the countries combined account for about one third of the global wheat trade. Prices of wheat, as well as those of maize and barley, are soaring. This will fuel the risk of famine and social discontent later this year and into 2023.

Among other concerns to be watched are a new, highly aggressive variant of Covid-19, an increase of cyber attacks and further spikes in energy prices.

Geopolitics are playing a bigger role in the global economy, the analysts conclude.

The era of ultra-low interest rates is over, which has implications for the financial markets.

This is likely to mean tough decisions on lockdowns, trade openness and interest rates, and will highlight the importance of good governance.