World trade growth could be almost halved this year, and global economic growth could also be affected by Russia's invasion of Ukraine, the World Trade Organization (WTO) warned on Monday (11.09.2022).
In a statement, the WTO Secretariat said the Russian invasion had not only created a humanitarian crisis of “immense proportions” but had also dealt a “serious blow” to the global economy.
The Geneva-based global trade body said that while Russia and Ukraine's share of overall global trade and production is relatively small, the countries are important suppliers of essential products, particularly food and energy.
“Using a global economic simulation model, the Secretariat projects that the crisis could reduce global GDP growth between 0,7 and 1,3 percentage points, which would bring growth to between 3,1% and 3,7% by 2022,” the WTO said.
“The model also projects that the World trade growth this year could slow almost half of the 4,7% forecast by the WTO last October to between 2,4 and 3%," he added.
The WTO noted that some regions would be hit harder by the war than others. Europe is the main destination for Russian and Ukrainian exports and is therefore likely to experience the biggest economic impact, the organization said. It also said Africa and the Middle East are vulnerable regions, as they import more than 50 percent of their grain needs from Ukraine and/or Russia.
Accordingly, the study stated that the Reduced shipments of grains and other food products will boost the prices of agricultural products, with negative consequences for the food safety in the poorest regions.
The WTO also warned that in the long term the war could trigger a disintegration of the global economy in “separate blocksIn this sense, economic sanctions could lead major economies to move towards “decoupling” based on geopolitical considerations, with the aim of achieving greater self-sufficiency in production and trade.
In response to supply chain disruptions, the WTO stressed “the importance of the rules-based multilateral trading system, particularly as it provides functions that can help cushion the impact of the crisis.”Note from the WTO Secretariat)
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