Global trade remained resilient and performed better than pessimistic predictions for 2022, as economies greatly affected by the Russia-Ukraine war had found alternative sources of supply, the World Trade Organisation (WTO) said in a note.
According to the information note released on Thursday, trade growth in 2022 was above the agency's forecast of 3 per cent issued in last April and substantially higher than its estimates for more pessimistic scenarios for the year.
For the longer-term outlook, new WTO simulations show the importance of strengthening the multilateral trading system, with least-developed countries likely to be hardest hit if international cooperation were to break down, Xinhua news agency reported.
Global trade "has held up well" in the face of the Russia-Ukraine war, WTO Chief Economist Ralph Ossa said.
"Despite the devastation, we have seen one year on, trade flows remained open," Ossa added.
Global trade has not seen the worst predictions foreseen at the onset of the crisis, he said.
"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," he added.
Trading partners found alternative sources to fill in the gaps for most products affected by the conflict, such as wheat, maize, sunflower products, fertiliser, fuels and palladium -- a rare earth mineral used in catalytic converters for cars, the note said.
Prices for goods greatly affected by the crisis rose less than expected at the beginning of the conflict. Among products most affected by the war, prices increased between 4.4 per cent (palladium) and 24.2 per cent (maize). While these price increases are substantial, they are significantly lower than the gloomiest predictions.
Take wheat prices for example. They actually increased by 17 per cent, much lower than the WTO Secretariat staff simulations of 85 per cent in some low-income regions.
The note further finds that as Ukrainian exports collapsed by 30 per cent in 2022 in value terms, many African economies adjust their sourcing patterns. Ethiopia, which used to rely on Ukraine and Russia for 45 per cent of its wheat imports, increased its purchases from other producers such as the US and Argentina.
Russia's exports expanded by 15.6 per cent in value terms because of an increase in prices particularly for fuels, fertilisers and cereals. However, estimates suggest Russia's export volume may have declined slightly. Trade flows are sharply down for industrial goods such as motor vehicles, pharmaceuticals or aircraft, where sanctions are more restrictive, the note added.
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First Published: Feb 24 2023 | 7:19 AM IST