WTO lowers 2022 global trade growth forecast to 3 pc from 4.7 pc
Apr 12, 2022
New Delhi [India], April 12 : The World Trade Organisation (WTO) on Tuesday lowered the 2022 global trade growth forecast to three per cent from its earlier projection of 4.7 per cent due to the Russia-Ukraine conflict.
The organisation now expects merchandise trade volume growth of 3.0 per cent in 2022--down from its previous forecast of 4.7 per cent -- and 3.4 per cent in 2023, but these estimates are less certain than usual due to the fluid nature of the conflict, WTO said in a statement.
The most immediate economic impact of the crisis has been a sharp rise in commodity prices. Despite their small shares in world trade and output, Russia and Ukraine are key suppliers of essential goods including food, energy, and fertilizers, supplies of which are now threatened by the war. Grain shipments through Black Sea ports have already been halted, with potentially dire consequences for food security in poor countries, the WTO said.
The war is not the only factor weighing on world trade at the moment. Lockdowns in China to prevent the spread of COVID-19 are again disrupting seaborne trade at a time when supply chain pressures appeared to be easing. 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," WTO Director-General Ngozi Okonjo-Iweala said in the statement.
"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," Okonjo-Iweala said.
She said governments and multilateral organisations must work together to facilitate trade at a time of sharp inflationary pressures on essential supplies and growing pressures on supply chains.
"History teaches us that dividing the world economy into rival blocs and turning our backs on the poorest countries leads neither to prosperity nor to peace. The WTO can play a pivotal role by providing a forum where countries can discuss their differences without resorting to force, and it deserves to be supported in that mission," she said.
With little hard data on the economic impact of the conflict, WTO economists have had to rely on simulations to generate reasonable assumptions about GDP growth in 2022 and 2023, the WTO said.
