GENEVA: Russia’s war in Ukraine could almost halve world trade growth this year and drag down global GDP growth too, the World Trade Organization projected Monday.
The WTO said that the Russian invasion had not only created a humanitarian crisis of “immense proportions” but had also dealt a “severe blow” to the global economy.
The Geneva-based global trade body said that while the shares of Russia and Ukraine in overall world trade and output are relatively small, they are important suppliers of essential products, notably food and energy.
“Using a global economic simulation model, the secretariat projects that the crisis could lower global GDP growth by 0.7 to 1.3 percentage points, bringing growth to somewhere between 3.1 percent and 3.7 percent for 2022,” the WTO said.
“The model also projects that global trade growth this year could be cut almost in half from the 4.7 percent the WTO forecasted last October to between 2.4 percent and three percent.”
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Russia invaded Ukraine on February 24 and the war is grinding toward its seventh week.
The WTO said that some regions would be more strongly affected by the war than others.
Europe is the main destination for both Russian and Ukrainian exports and therefore is likely to experience the heaviest economic impact, the organisation said.
Reduced shipments of grains and other foodstuffs will boost the prices of agricultural goods, with negative consequences for food security in poorer regions, it added.
“The brunt of the suffering and destruction are being felt by the people of Ukraine themselves but the costs in terms of reduced trade and output are likely to be felt by people around the world through higher food and energy prices and reduced availability of goods exported by Russia and Ukraine,” the WTO study said.
“Poorer countries are at high risk from the war, since they tend to spend a larger fraction of their incomes on food compared to richer countries.
“This could impact political stability.”