On Monday, the World Trade Organization predicted that Russia’s war in Ukraine will practically halve global trade growth this year, dragging down global GDP growth as well.
The World Trade Organization (WTO) stated that the Russian invasion had caused not just a massive humanitarian crisis, but also a devastating economic blow to the world.
It also stated that the conflict could lead to the disintegration of the global economy into separate blocs in the long run.
Ahead of its annual world trade projection report on Tuesday, the Geneva-based global trade organization released its first estimate of the war’s impact.
While Russia and Ukraine had tiny percentages of global commerce and output, they were key suppliers of basic goods, such as food and energy, according to the report.
“Using a global economic simulation model, the secretariat estimates that the crisis will reduce global GDP growth by 0.7 to 1.3 percentage points in 2022, bringing growth to between 3.1 and 3.7 percent,” the WTO said.
“The model also predicts that global trade growth this year might be slashed in half from the WTO’s prediction of 4.7 percent in October to between 2.4 and three percent,” it added.
According to the WTO, the war would have a greater impact on some regions than others.
Because Europe is the primary destination for both Russian and Ukrainian goods, it is expected to bear the brunt of the economic effect.
“Reduced supplies of grains and other foodstuffs will raise agricultural goods prices, posing a threat to food security in impoverished regions,” according to the organization.
Africa and the Middle East are thought to be the most susceptible, as they rely on Ukraine and/or Russia for more than half of their cereal needs.
According to the World Trade Organization, due to the war’s influence on grain supplies, some Sub-Saharan African countries could face price increases of up to 85% for wheat.
“While the people of Ukraine bear the brunt of the misery and damage, the costs, in terms of diminished commerce and output, are likely to be felt by people all over the world through higher food and energy prices and limited availability of goods exported by Russia and Ukraine.” Poorer countries are more vulnerable to the war since they spend a bigger proportion of their income on food than affluent countries.
According to the WTO report, “this could have an impact on political stability.”
AFP
