Global trade remained resilient and performed better than “pessimistic predictions’’ for 2022 as economies hit by Russia’s war in Ukraine found alternative sources of supply, as per a new information note on the global economy released by the WTO following one year of the Ukraine crisis.
The note, released on Thursday, warned that least-developed countries were likely to be hardest hit if international cooperation were to break down and suggested that it was important to strengthen the multilateral trading system to protect the most vulnerable.
Trade growth in 2022 was above the WTO trade forecast of 3 per cent issued in April (now estimated at about 3.5 per cent), the note stated.
Sharply higher food prices and supply shortages have not materialised thanks to the openness of the multilateral trading system and the cooperation governments have committed to at the WTO, it said.
Ukrainian exports, though, collapsed by 30 per cent in 2022 in value terms while Russia’s exports expanded by 15.6 per cent in value terms, mostly because of an increase in prices particularly for fuels, fertilizers and cereal.
“Global trade has held up well in the face of the war in Ukraine. Despite the devastation we have seen one year on, trade flows remained open. We have not seen the worst predictions foreseen at the onset of the war,” according to Chief Economist Ralph Ossa
Russia invaded Ukraine on February 24 2022 in a major escalation of the conflict which began in 2014. Thousands of deaths have taken place on both sides since then and supply chains have been severely disrupted worldwide.
Prices of a range of products increased, for instance maize which witnessed one of the highest price rises of about 24.2 per cent, but these were significantly lower than the gloomiest predictions, the note said.
WTO Secretariat staff simulations highlighted that in the case of cascading export restrictions on food, prices for wheat could have increased by up to 85 per cent in some low-income regions compared to the actual increase of 17 per cent.
“The relative restraint in the imposition of export restrictions by WTO members may have played a key role in keeping price increases in check,” the note said.
Exports of cereals declined by 14.9 per cent during the year forcing many African economies to adjust their sourcing patterns. “Ethiopia, for example, which used to rely on Ukraine and Russia for 45 per cent of its wheat imports, reacted by increasing purchases from other producers including the United States (shipments up 20 per cent in volume terms) and Argentina, which supplied 21 per cent of Ethiopia’s imported wheat, up from zero in the previous year.),” it added