Just as world trade was recovering in the wake of the Covid-19 pandemic, it is now being hit by another shock in the form of Russia's war on Ukraine. In a new report this week, the World Trade Organisation predicts that the volume of trade in goods will be only 3 per cent this year, more than one third lower than its pre-war forecast of 4.7 per cent. But with the war still raging and the dearth of data on its economic impact, this is a guesstimate. The WTO warns that the growth in merchandise trade volume could go as low as 0.5 per cent if the war persists or escalates, but could rise by 5.5 per cent if it ends sooner than expected.
The immediate impact of the war has been a sharp rise in food prices, because Russia and Ukraine are among the world's largest exporters of wheat, corn and fertilisers as well as oil seeds, and key transit routes have been blocked. One of the consequences has been a rise in food protectionism, with several countries including not only Russia, but also Argentina, Egypt, Hungary, Indonesia, Serbia and Turkey restricting exports of staple grains and cooking oil.
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