The Director-General of World Trade Centre (WTC), Dr Ngozi Okonjo-Iweala, has warned that the war in Ukraine has created immense human suffering.
“It has also damaged the global economy at a critical juncture. Its impact will be felt around the world, particularly in low-income countries, where food accounts for a large fraction of household spending.
“Smaller supplies and higher prices for food mean that the world’s poor could be forced to do without.
“This must not be allowed to happen. This is not the time to turn inward. In a crisis, more trade is needed to ensure stable, equitable access to necessities. Restricting trade will threaten the well-being of families and businesses and make the task of building a durable economic recovery from COVID-19.”
She said governments and multilateral organisations must work together to facilitate trade at a time of sharp inflationary pressures on essential supplies and growing pressures on supply chains.
“History teaches us that dividing the world economy into rival blocs and turning our backs on the poorest countries leads neither to prosperity nor to peace.
The WTO can play a pivotal role by providing a forum where countries can discuss their differences without resorting to force, and it deserves to be supported in that mission,” she said.
With little hard data on the economic impact of the conflict, WTO economists have had to rely on simulations to generate reasonable assumptions about GDP growth in 2022 and 2023.
Estimates based on the WTO Global Trade Model capture the direct impact of the war in Ukraine, including destruction of infrastructure and increased trade costs.
The impact of sanctions on Russia – the blocking of Russian banks from the SWIFT settlement system; and reduced aggregate demand in the rest of the world due to falling business/consumer confidence and rising uncertainty.
Under these assumptions, world GDP at market exchange rates is expected to grow by 2.8 per cent in 2022, down 1.3 percentage points from the previous forecast of 4.1 per cent . Growth should pick up to 3.2 per cent in 2023, close to the average rate of 3.0 per cent between 2010 and 2019.
Output in the Commonwealth of Independent States (CIS) region-which excludes Ukraine-is expected to see a sharp 7.9 per cent drop, leading to a 12.0 per cent contraction in the region’s imports.
World Trade Centre noted that the low level of imports in Africa is partly due to unexpected declines in the second half of 2021, which are projected forward into the future.
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