WTO: Tensions between Russia and Ukraine “deal a heavy blow” to the global economy

The World Trade Organization (WTO) warns that the conflict between Russia and Ukraine could cut growth by 50% global trade this year and drag down world GDP growth.

The WTO said that the tensions surrounding the Ukraine situation have “dealt a severe blow” to the global economy. Based on a global economic simulation model, the WTO predicts that Russia-Ukraine tensions could reduce GDP growth by 0.7% – 1.3% to 3.1% – 3.75% this year.

The organization also forecasts that this year’s global trade growth could be nearly halved to about 2.4-3%.

In the long term, the WTO warns Russian-Ukrainian conflict could even spark the disintegration of the global economy into separate blocs. At the global level, this trend could reduce GDP by around 5% in the long term through restricting competition and stifling innovation.

The WTO Secretariat also said the conflict has pushed up food and energy prices and reduced the ability of Russia and Ukraine to supply exports.

Both Russia and Ukraine are important suppliers of essential products, especially food and energy. The two countries supplied about 25% of wheat, 15% of barley and 45% of sunflower products exported globally in 2019.

Russia alone accounts for 9.4% of world fuel trade, including 20% ​​of natural gas exports.

The WTO highlights Russia as one of the global suppliers of palladium and rhodium, which are important elements in the production of catalytic converters for cars.

Meanwhile, semiconductor production is significantly dependent on neon gas supplied by Ukraine. Disruptions to the supply of these materials could affect automakers at a time when the industry is recovering from semiconductor shortages.

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