The World Trade Organization (WTO) on Tuesday lowered its global trade estimate for 2022 amid Russia's war on Ukraine and rising commodity prices.
In a statement, the intergovernmental organization said that it now expects global merchandise trade volume growth of 3% for this year, down from its previous forecast of 4.7%. It had jumped 9.8% in 2021.
The WTO forecasts that the global economy will expand by 2.8% in 2022, down from the previous forecast of 4.1%, after rising 5.7% last year.
While global economy is forecast to grow 3.2% in 2023, international trade volume is expected to grow 3.4% next year, WTO said, adding that those estimates could be revised due to uncertainty about the war.
"The most immediate economic impact of the crisis has been a sharp rise in commodity prices. Despite their small shares in world trade and output, Russia and Ukraine are key suppliers of essential goods including food, energy, and fertilizers, supplies of which are now threatened by the war," it said.
"The war is not the only factor weighing on world trade at the moment. Lockdowns in China to prevent the spread of COVID-19 are again disrupting seaborne trade at a time when supply chain pressures appeared to be easing. This could lead to renewed shortages of manufacturing inputs and higher inflation," WTO added.
WTO Director-General Ngozi Okonjo-Iweala said the war has hurt the global economy, and its impact is felt especially in low-income countries where food accounts for a large percentage of household spending.
"Smaller supplies and higher prices for food mean that the world's poor could be forced to do without ... In a crisis, more trade is needed to ensure stable, equitable access to necessities. Restricting trade will threaten the wellbeing of families and businesses and make more fraught the task of building a durable economic recovery from COVID‑19," she added.