Russian invasion
WTO warns of the consequences of the Ukraine war for the global economy
A container terminal in the port of Hamburg. Photo: Daniel Reinhardt/dpa
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The World Trade Organization looks to the future with concern: the current economic situation exposes developing and emerging countries to great risks; political stability is at risk.
According to an analysis by the World Trade Organization (WTO), the Russian war against Ukraine could cost the global economy growth of up to 1.3 percentage points this year.
According to model calculations, gross domestic product is only likely to grow by 3.1 to 3.7 percent in 2022, the WTO said in Geneva in an analysis of the consequences of the war for trade. The organization cites higher food and energy prices and falling exports from Russia and Ukraine as the reason. “Poorer countries are exposed to great risks from the war because they spend a larger part of their income on food than richer countries,” it said. “That could have consequences for political stability.”
Warning of breaking up into trading blocs
In October, the WTO was still expecting world trade to grow by 4.7 percent this year. According to new calculations, this could be almost halved, according to the WTO. It’s not just about Russian and Ukrainian exports of energy, grain and sunflower products. Russia is one of the main suppliers of palladium and rhodium for the production of catalytic converters for cars, Ukraine supplies neon to the semiconductor industry.
“Europe, as the main buyer of Russian and Ukrainian exports, will feel the economic impact most severely,” according to the WTO. The organization warns of negative consequences if the global economy breaks up into trading blocs and countries focus more on self-sufficiency in production and trade. That harms the competition and stifles innovation. The consequences would be particularly serious for developing and emerging countries.