Global trade outperforms expectations
A 4% rise in 2022 global trade flies in the face of pessimistic expectations of trade disruptions
The World Trade Organisation (WTO) reports that global trade in intermediate goods rose 4% in 2022, beating their forecast.
This comes despite sanctions and export constraints coming as a result of the Russia-Ukraine war. WTO figures attributed this resilience to continued commitments to multilateral trade outside of the affected conflict areas.
The WTO stressed in a research note the importance of strengthening the multilateral trading system. It gave a word of warning that a failure in international cooperation here would adversely affect the least-developed countries.
Chief economist at the WTO, Ralph Ossa said: “We have not seen the worst predictions foreseen at the onset of the war. Sharply higher food prices and supply shortages have not materialised thanks to the openness of the multilateral trading system and the cooperation governments have committed to at the WTO.”
Of those prices most affected by the war, prices for palladium increased between 4.4% and maize rose 24.2%. Even with these jumps, the price increases are lower than the worst predictions at the onset of the war. The on-the-ground increase of wheat prices in the most at-risk low-income regions has been 17%, compared to the 85% expected.
Price increases have been restrained because of the imposition of export restrictions by WTO members.
The report also notes that Ukrainian exports fell by 30% in 2022 in value terms. Many African economies were forced to seek other sources of wheat. Ethiopia, usually reliant on Ukraine and Russia for 45% of its wheat imports, increased purchases from the United States (up by 20% in volume terms) and from Argentina (21% of Ethiopia’s total imported wheat, up from zero in 2021).
Russia’s exports expanded by 15.6% in value terms due to an increase in prices for fuels, fertilisers and cereals. Where sanctions are more restrictive, for example in motor vehicles, pharmaceuticals or aircraft, trade flows have decreased far more sharply.