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War could halve global trade growth, says WTO | War in Ukraine

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The WTO was due to announce its annual forecast for world trade in goods on Tuesday, but it finally published an initial analysis of the impact of the crisis in Ukraine on Monday evening, while maintaining the press conference on Tuesday with its director general Ngozi Okonjo- Iweala.

According to this first study, the crisis should reduce the growth of world GDP to a level between 3.1% and 3.7% this year, while that of world trade should settle between 2.4% and 3%. In October, the WTO was expecting an increase of 4.7%.

The war in Ukraine has not only created a humanitarian crisis of immense proportions, but has also severely shaken the world economy.

Since the Russian invasion on February 24, tons of grain have remained docked in Ukrainian ports such as Mariupol, a city bombarded and besieged by the Russian army for its strategic position.

The bulk of the suffering and destruction is felt by the people of Ukraine, but the costs in terms of reduced trade and production will likely be felt by people around the world due to rising food and energy prices. and reduced availability of goods exported from Russia and Ukraine. »

A quote from Excerpt from an analysis by the WTO Secretariat

While Russia’s and Ukraine’s shares in total world production and trade are relatively small, both countries are important suppliers of essential commodities, including food and energy.

According to the WTO, the two countries distributed in 2019 around 25% of the world’s wheat, 15% of barley and 45% of sunflower. Russia alone accounts for 9.4% of world fuel trade, a share that rises to 20% for natural gas.

Moscow and kyiv are also key input suppliers in industrial value chainssays the WTO in its report.

Russia is thus one of the world’s leading suppliers of palladium and rhodium, used in the automotive industry, accounting for 26% of global palladium import demand in 2019.

Semiconductor production is also heavily dependent on neon, which is supplied by Ukraine.

An impact first felt in Europe

Europe, the main destination for Russian and Ukrainian exports, is expected to bear the brunt of the economic impact, according to the WTO.

But the reduction in exports of cereals and other foodstuffs will drive up the prices of agricultural products, with negative consequences for the food security of the poorest regions. Africa and the Middle East are the most vulnerable regions according to the WTO, as they import more than 50% of their grain needs from Ukraine and Russia.

In addition, warns the WTO, one of the longer-term risks is that the war could trigger a disintegration of the global economy into separate blocswhich would be organized according to geopolitical considerations.

Such a scenario says decoupling would very costly for the global economy, especially for less developed regions.

Globally, this could reduce GDP by around 5% in the long term, particularly affecting emerging countries, according to the report, which notes that the decline could be even greater.

Russia singled out by the EU

The head of European diplomacy Josep Borrell for his part accused on Monday Russia of cause world hunger with the war in Ukraine, by destroying wheat stocks and preventing it from being exported, particularly to Africa.

Russians Blame (Western-Imposed) Sanctions for Food Shortages and Rising Prices, When Sanctions Aren’tsaid the Spanish official after a meeting of European foreign ministers in Luxembourg.

Russia bombs fields in Ukraine, Russian warships block dozens of boats loaded with wheatMr. Borrell continued. They cause scarcity. They bomb Ukrainian cities and cause hunger in the worldhe said.

So stop blaming the sanctions. It is the Russian army that is causing food shortages. And Africa is a source of major concern because they are particularly exposed to the coming food crisis. »

A quote from Josep Borrell, head of diplomacy of the European Union

The Food and Agriculture Organization of the United Nations (FAO) said on Friday that world food prices in March reached their highest levels ever recordedthe war in Ukraine posing a risk of a global crisis.

Grain shortages likely to cause food riots are feared in the Middle East and North Africa. Egypt, Turkey, Bangladesh or Nigeria, highly populated countries, are the main importers of cereals from Russia and Ukraine.

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