Global Trade Fared Better Than Expected in 2022, WTO Says
Global trade fared better than predictions for 2022 despite the disruptions caused by the war in Ukraine, the World Trade Organization reported in a Feb. 23 information note. Various industries were able to find alternative sources of supply for goods affected by Russia's invasion, including wheat, maize, sunflower products, fertilizer, fuels and palladium.
The WTO said early estimates of trade growth sit above the organization's original prediction of 3% growth, with trade in intermediate goods up 4% year-over-year in the second quarter of 2022. Prices for key goods affected by the war in Ukraine were "remarkably resilient," increasing by between 4.4% (palladium) and 24.2% (maize), the WTO said. These jumps are "significantly lower than the gloomiest predictions." Prices for wheat could have soared by as much as 85% in some regions, the WTO simulated, though in reality the price jumped only 17%.
Exports from Ukraine dropped by 30% in 2022. Cereal exports declined 14.9%, forcing many African economies to find alternatives. Ethiopia, for instance, which used to get 45% of its wheat from Ukraine and Russia, shifted to alternatives, increasing its purchases from the U.S. by 20%. Argentina supplied 21% of the country's cereals after supplying nothing the year prior. Russia, meanwhile, grew its exports by 15.6% due to an increase in prices for fuels, fertilizers and cereals, though "estimates suggest that Russia's export volume may have slightly declined," the WTO said.
“Global trade has held up well in the face of the war in Ukraine," WTO Chief Economist Ralph Ossa said. "Despite the devastation we have seen one year on, trade flows remained open. We have not seen the worst predictions foreseen at the onset of the war. Sharply higher food prices and supply shortages have not materialized thanks to the openness of the multilateral trading system and the cooperation governments have committed to at the WTO. Resilience will ultimately be best served by fostering deeper and more diverse international markets, anchored in open and predictable trade rules."