The World Trade Organization (WTO) has cut its global trade growth forecast for 2022 due to Russia’s military operation in Ukraine and its immediate consequences – sanctions on Russia.
While previously set at 4.7%, the global growth forecast was nearly halved this week to 2.5% due to “the impact of the war and related policies,” the WTO’s director general, Dr. Ngozi Okonjo-Iweala, told the BBC.
According to the official, while Russia and Ukraine make up only about 2.5% of global merchandise exports, they “are very, very significant in certain sectors.” For instance, the two countries are traditionally referred to as the world’s bread basket, as they are major exporters of grain, especially wheat and corn.
Okonjo-Iweala predicts that the global economy is “going to suffer some severe consequences,” with poorer states likely to suffer most from Ukraine-related “supply constraints on food,” which would inevitably drive up prices.
“My worry is that we have a food crisis that is brewing… I’m truly worried about looming hunger, particularly in poor countries that can least afford it,” the official said.
According to the African Development Bank, many African nations have seen food prices rise by 20% to 50% within the past month.
Apart from food, the costs of other commodities have been on the rise in the past five weeks, with market players worried that the economic sanctions Russia is facing will lead to supply disruptions. Metals, fertilizers, and energy carriers have all hit record highs since the operation in Ukraine kicked off. This has only added to the problems caused by the Covid-19 pandemic, which include supply chain issues and inflation. The WTO head says the situation is not likely to improve in the near future.
“In the short to medium term, I think that we are going to see these inflationary pressures continue,” she stated.
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