Reduced supplies or the threat of reduced supplies, of essential goods caused commodity prices to spike in 2022, with food prices rising 18 per cent year-on-year (65 per cent compared to 2019).

New Delhi (ABC Live): The volume of world merchandise trade grew 2.7 per cent in 2022, slightly weaker than WTO projections. 

Trade and output growth for the year were dampened by several adverse economic factors, which collectively came to be regarded as a “polycrisis”. 

The largest of these crises was the outbreak of war between Russia and Ukraine in late February, which has caused immense human suffering and extensive destruction of productive capacity in Ukraine and led to the imposition of broad economic and trade sanctions against Russia.

In a report on the crisis issued in April 2022, the WTO noted that Russia and Ukraine were key suppliers of essential goods, notably food and energy.

 Russia and Ukraine together accounted for 25 per cent of global wheat trade in 2019, while Russia alone made up 9.4 per cent of trade in fuels, including a 20 per cent share in natural gas trade. Countries in the Middle East and Africa were most vulnerable to the conflict in terms of food supply, with many importing around half of their grain needs from Ukraine, Russia or both.

An updated WTO report issued on 23 February 2023 found that global trade remained resilient in 2022 and performed better than initially feared as economies most affected by the war found alternative sources of supply. 

Prices for goods affected by the war also rose less than expected. However, Ukrainian exports collapsed by 30 per cent in value terms. Russia’s exports expanded by 15.6 per cent because of an increase in prices but its export volume appeared to have declined slightly. 

Reduced supplies or the threat of reduced supplies, of essential goods caused commodity prices to spike in 2022, with food prices rising 18 per cent year-on-year (65 per cent compared to 2019). 

Energy prices also jumped 58 per cent in 2022 (93 per cent compared to 2019), including a dramatic rise in natural gas. 

The curtailing of gas shipments between Russia and the European Union disproportionately affected energy prices in Europe, but efforts to find alternative sources of supply raised prices for liquified natural gas (LNG) elsewhere. Gas prices in North America, with its plentiful local production, remained low compared to the rest of the world.

High energy prices fed into a rise in general inflation, which had already picked up following the pandemic, partly due to supply chain disruptions and partly as a result of expansionary fiscal and monetary policies in many economies, including the United States and the European Union.

Central banks around the world began to raise interest rates in an effort to rein in inflation, but this could weigh on business and consumer spending in 2023 and beyond. Measures to combat COVID-19 were relaxed in most economies over the course of 2022, but strict controls remained in some places, most notably China. 

Intermittent outbreaks of the virus disrupted production and shipping throughout the year, weighing on global trade volumes. China announced in early 2023 that its zero-COVID-19 policies were being wound down, boosting prospects for global trade flows and economic output.

Source : The WTO Report 2023