Global trade remained resilient and performed better than pessimistic predictions for 2022 as economies greatly affected by the war in Ukraine found alternative sources of supply, according to a World Trade Organisation note.
For the longer-term outlook, new WTO simulations showed the importance of strengthening the multilateral trading system, with least-developed countries likely to be hardest hit if international cooperation were to break down. The note titled — One year of war in Ukraine: Assessing the impact on global trade and development — also found that global trade was resilient, following one year of war in Ukraine.
The WTO note estimated that global trade growth in 2022 was above the WTO trade forecast of 3 per cent issued in April and substantially higher than its estimates for more pessimistic scenarios for the year.
The stability of global trade was also evident in global supply chains, confirmed by the 4 per cent year-on-year growth of trade in intermediate goods in the second quarter of 2022, it said.
“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,” Chief Economist Ralph Ossa said, adding, “Sharply higher food prices and supply shortages have not materialized thanks to the openness of the multilateral trading system and the cooperation governments have committed to at the WTO.”
“Resilience will ultimately be best served by fostering deeper and more diverse international markets, anchored in open and predictable trade rules,” he said.
Furthermore, trade in products significantly affected by the war and trade by the most exposed countries were remarkably resilient, WTO said in the note.
Trading partners found alternative sources to fill in the gaps for most products affected by the conflict, such as wheat, maize, sunflower products, fertiliser, fuels and palladium — a rare earth mineral used in catalytic converters for cars, it added.
Prices for goods greatly affected by the war rose less than expected at the beginning of the war. Among products most affected by the war, prices increased between 4.4 per cent for palladium and 24.2 per cent for maize.
While these price increases are substantial, they are significantly lower than the gloomiest predictions. 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 note further finds that Ukrainian exports collapsed by 30 per cent in 2022 in value terms.
Exports of cereal, which are central to the food security of many African economies, declined by 14.9 per cent forcing these economies to adjust their sourcing patterns.
Russia’s exports expanded by 15.6 per cent in value terms because of an increase in prices particularly for fuels, fertilisers and cereals, according to the WTO note.
However, estimates suggested Russia’s export volume may have declined slightly. Trade flows are sharply down for industrial goods such as motor vehicles, pharmaceuticals or aircraft, where sanctions are more restrictive. (ANI)