Growth could be halved
WTO: War deals “heavy blow” to world economy
04/12/2022, 09:39 am
In October, the World Trade Organization was still expecting growth of 4.7 percent for 2022. But the war in Ukraine is also putting pressure on the global economy. The WTO is alarmed: Europe is likely to feel the consequences – it could ultimately be dramatic for poorer countries.
According to an analysis by the World Trade Organization (WTO), the Russian war against Ukraine could cost the global economy growth of up to 1.3 percentage points this year. According to model calculations, gross domestic product should only grow by 3.1 to 3.7 percent in 2022, the WTO explained in an analysis of the consequences of the war for trade. The Russian invasion not only triggered a humanitarian crisis of “immense proportions” but also dealt a “serious blow” to the global economy. The organization cites higher food and energy prices and falling exports from Russia and Ukraine as the reason.
In October, the WTO was still expecting world trade to grow by 4.7 percent this year. According to new calculations, this could be almost halved, according to the WTO. It’s not just about Russian and Ukrainian exports of energy, grain and sunflower products. Russia is one of the main suppliers of palladium and rhodium for the production of catalytic converters for cars, Ukraine supplies neon to the semiconductor industry.
“Europe, as the main buyer of Russian and Ukrainian exports, will feel the economic impact most severely,” the WTO said. 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. “That could have consequences for political stability.” Missing deliveries of grain and other foodstuffs will therefore push up the prices of agricultural products. A price increase of 50 to 85 percent for wheat can be expected.
In the long term, sanctions by Western countries and Russia’s response could result in major economies decoupling for geopolitical reasons, the WTO has warned. Even if no formal blocs form in world trade, private actors could adjust their supply chains accordingly. The income losses that would result from such a development “would be serious, especially for emerging and developing countries”.