AN analysis from the World Trade Organization has illustrated the current fragility of global trade between the Russia-Ukraine conflict and shipping disruptions in China.
WTO economists said prospects for the global economy have “darkened” since war broke out in Ukraine, prompting a reassessment of their two-year forecast for world trade.
According to the WTO, the most immediate impact of the Russia-Ukraine conflict has been a sharp rise in commodity prices.
Russia and Ukraine have comparatively small shares in world trade and output, but they are key suppliers of essential goods such as food, energy, and fertilisers, which are now threatened by the war.
A major concern expressed by the WTO was that grain shipments through Black Sea ports had been halted, which may threaten food security in poorer countries.
“The war in Ukraine has created immense human suffering, but it has also damaged the global economy at a critical juncture,” WTO director-general Ngozi Okonjo-Iweala said
“Its impact will be felt around the world, particularly in low-income countries, where food accounts for a large fraction of household spending,” she said.
“Smaller supplies and higher prices for food mean that the world’s poor could be forced to do without.”
Economists said the services trade will also be affected by the conflict in Ukraine, including the transport sector, covering both container shipping and air transport.
Lockdowns in China’s major port cities have reportedly added another layer of complexity to the situation.
This has been widely confirmed by shipping companies’ reports of freight disruptions across major Chinese ports, which have been attributed to the COVID-19 restrictions.
Though landside operations were most heavily impacted by the lockdown measures, air and sea freight were disrupted by flow-on effects.
The WTO said the restrictions disrupted seaborne trade at a time when supply chain pressures appeared to be easing.
Major disruptions are expected to lead to renewed shortages of manufacturing inputs and higher inflation.
Ms Okonjo-Iweala highlighted the vital role of trade during crisis, as it ensures stable and equitable access to necessities.
“Restricting trade will threaten the wellbeing of families and businesses and make more fraught the task of building a durable economic recovery from COVID‑19.”
She said governments and multilateral organizations 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.”
