World trade volume could halve due to Ukraine war in 2022
The World Trade Organization (WTO) estimates that the volume of world trade could halve this year because of the war in Ukraine.
the essentials in brief
- Europe hardest hit – Poorer countries most at risk.
The Russian invasion not only triggered a humanitarian crisis of “immense proportions”, but also dealt a “serious blow” to the global economy, according to a report published by the organization on Monday. In the long term, there is a risk that the global economy will collapse into blocks because of the conflict.
The Geneva-based WTO published a first analysis of the consequences of the war ahead of its world trade forecasts, which are due to be presented on Tuesday. Experts point out that Europe is the largest importer of goods from both Russia and Ukraine. In return, Europe will also be hit hardest economically.
But it is most likely to be dramatic in Africa and the Middle East: “The poorer countries are particularly at risk from the war because they spend a larger part of their income on food than the richer countries,” says the report. A lack of supplies of grain and other foodstuffs will therefore push up the prices of agricultural products. So a price increase of 50 to 85 percent for wheat can be expected.
In the long run, the sanctions imposed by Western states and Russia’s response could result in major economies decoupling from geopolitical oversight, the WTO has warned. Even if no formal blocs form in world trade, private actors could adjust their supply chains accordingly. The loss of income that would result from such a development “would be serious, especially for emerging and developing countries”.
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