The World Trade Organization (WTO) has almost halved its forecast for world trade growth in 2022 due to the Russian military operation in Ukraine and its immediate aftermath, the sanctions imposed on Russia.
The forecast, previously set at 4.7%, was lowered to 2.5% this week due to the “impact of the war and related policies”, the agency’s director-general, Ngozi Okonjo-Iweala, told the BBC.
As the official explains, while Russia and Ukraine represent only 2.5% of world exports of goods, they “are very, very important in certain sectors.” For example, the two countries are traditionally known as the granaries of the world, being large exporters of grains, particularly wheat and corn.
Okonjo-Iweala predicts that the global economy will “suffer some serious consequences,” with poorer states suffering most from conflict-related “food supply restrictions” that will inevitably push up prices.
“I worry that a food crisis is brewing. I’m really worried about the hunger that is coming, especially in the poor countries that can least afford it,” lamented the official.
According to the African Development Bank, numerous African nations have seen food price increases of between 20% and 50% in the past month.
Besides food, the cost of other basic commodities has also risen over the past five weeks as market participants fear the economic sanctions Russia is facing will disrupt supplies.
Various metals, fertilizers and fuels have hit all-time highs since the operation began in Ukraine. This comes on top of previous difficulties caused by the Covid-19 pandemic, which led to supply chain problems and inflation.
The director of the WTO sees it as unlikely that the situation will improve in the near future. “I think that in the short and medium term we will see a continuation of these inflationary pressures,” he predicted.
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