The World Trade Organization (WTO) has stated that the global economy has darkened since the outbreak of the war between Ukraine and Russia on February 24, prompting the WTO to reassess the projections for world trade over the next two years. The war puts global trade recovery at risk, which is already fragile due to the pandemic.
The WTO now expects a world merchandise trade volume growth of three percent in 2022, down from its previous forecast of 4.7 percent, and growth of 3.4 percent in 2023.
“There is some upside potential if the war in Ukraine ends sooner than expected, but substantial downside risks could emerge if fighting persists for a long time,” the WTO said.
The war has led commodity prices to increase sharply, but it 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.
According to the WTO’s statement, world GDP is expected to increase by 2.8 percent in 2022, compared to a 4.1 percent rise in the previous forecast, after rising by 5.7 percent in 2021.