The world merchandise trade volume is expected to grow by 3 per cent in 2022 against the earlier forecast of 4.7 per cent, mainly due to the ongoing war between Russia and Ukraine, the World Trade Organsation (WTO) said on Tuesday.
Prospects for the global economy have darkened since the outbreak of war in Ukraine on February 24, prompting WTO economists to reassess their projections for world trade over the next two years, the global trade body said in a statement.
“The organisation now expects merchandise trade volume growth of 3 per cent in 2022 – down from its previous forecast of 4.7 per cent – and 3.4 per cent in 2023, but these estimates are less certain than usual due to the fluid nature of the conflict,” it added.
The most immediate economic impact of the crisis has been a sharp rise in commodity prices. Despite their small shares in world trade and output, Russia and Ukraine are key suppliers of essential goods, including food, energy, and fertilisers, supplies of which are now threatened by the war, the statement said. Grain shipments through Black Sea ports have already been halted, with potentially dire consequences for food security in poor countries, WTO noted.
Besides the war, lockdowns in China to prevent the spread of COVID-19 are again disrupting seaborne trade at a time when supply chain pressures appeared to be easing, it said, adding this could lead to renewed shortages of manufacturing inputs and higher inflation.
“The war in Ukraine…has also damaged the global economy at a critical juncture. Its impact will be felt around the world, particularly in low-income countries, where food accounts for a large fraction of household spending,” Director-General Ngozi Okonjo-Iweala said. “In a crisis, more trade is needed to ensure stable, equitable access to necessities. Restricting trade will threaten the wellbeing of families and businesses…,” she said.
She added that governments and multilateral organisations must work together to facilitate trade at a time of sharp inflationary pressures on essential supplies and growing pressures on supply chains.
These growth projections will be updated in October, but an earlier revision could be issued if incoming data warrant it, the statement said.