The World Trade Organization has reassessed its projections for the next two years following the outbreak of war in Ukraine. The organisation says that Russia-Ukraine war which started on February 24 has darkened the global economy.
In its latest report released on Tuesday, the organization now expects world “merchandise trade volume growth of 3.0% in 2022—down from its previous forecast of 4.7%—and 3.4% in 2023, but these estimates are less certain than usual due to the fluid nature of the conflict.”
World GDP at market exchange rates is expected to increase by 2.8% in 2022 after rising 5.7% in 2021.
The WTO projects that the CIS region should see a 12.0% decline in imports and a 7.9% drop in GDP in 2022, but exports should grow by 4.9% as other countries continue to rely on Russian energy.
Russia and Ukraine are key suppliers of essential goods including food, energy, and fertilizers, supplies of which are now threatened by the war, the report said. Adding that “grain shipments through Black Sea ports have already been halted, with potentially dire consequences for food security in poor countries.”
In addition to the war in Ukraine, China’s recent lockdowns to combat COVID-19 is also weighing on world trade according to the report. “This could lead to renewed shortages of manufacturing inputs and higher inflation.”
“The war in Ukraine has created immense human suffering, but it 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.
“Smaller supplies and higher prices for food mean that the world’s poor could be forced to do without. This must not be allowed to happen. This is not the time to turn inward. In a crisis, more trade is needed to ensure stable, equitable access to necessities. Restricting trade will threaten the wellbeing of families and businesses and make more fraught the task of building a durable economic recovery from COVID‑19,” she added.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.
