The World Trade Organization (WTO) estimates that the volume of world trade could halve this year because of the war in Ukraine. In the long term, there is a risk that the global economy will fall apart because of the conflict. The Geneva-based WTO released an initial analysis of the aftermath of the war ahead of its annual world trade forecasts, which are due to be presented on Tuesday. Experts point out that Europe is the largest importer of goods from both Russia and Ukraine. Accordingly, Europe will also be hit hardest economically.
But it is most likely to be dramatic in Africa and the Middle East: “The poorer countries are particularly at risk from the war because they spend a larger part of their income on food than the richer countries,” says the report. Missing deliveries of grain and other foodstuffs will therefore push up the prices of agricultural products. A price increase of 50 to 85 percent for wheat can be expected.
In the long term, sanctions by Western countries and Russia’s response could result in major economies decoupling for geopolitical reasons, the WTO has warned. Even if no formal blocs form in world trade, private actors could adjust their supply chains accordingly. The income losses that would result from such a development “would be serious, especially for emerging and developing countries”.
Source: Nachrichten
