With recovery fragile, last thing economy needs is a Ukrainian crisis: analysts

OTTAWA – Economists and business leaders say Ukraine’s political and military crisis could become a big economic problem as well.

Analysts say the if the crisis is not resolved quickly, and if the West reacts with sanctions against Russia, the pain could easily spread to the rest of the world economy, and that includes Canada.

At present, Canadian direct investment and trade with Russia is small — impacting only a relatively small number of firms — but it has been growing.

However, Doug Porter, the top economist with BMO Capital Markets, says the biggest danger would come from the indirect impacts if the crisis escalates.

He says global business and consumer confidence would take a hit, which could wash over the Canadian economy through falling global demand and commodity prices.

TD Bank chief economist Craig Alexander says another danger is if Ukraine is unable to pay its debts, which could impact European banks leading to concerns in the financial system.