The ongoing crisis in Ukraine has highlighted just how interconnected the world’s economy is. As with the pandemic, humanitarian, political and environmental shocks in one region can affect the global markets on a wide-reaching scale.
These five stats highlight the extent to which the war in Ukraine is impacting world trade.
Trade value sinks
Almost all major trade zones have seen a fall in value, predominantly due to the sharp drop in container ship traffic from Russia.
Keil Institute for the World Economy found through tracking shipping data that Russian imports are down nearly 10% whilst exports fell 5%. In the EU, exports fell 5.6% and imports by almost three and a half percent.
The US has seen falls too, whilst China has been the least affected with exports down 0.9% and imports actually increasing by the same amount.
Inflated shipping costs
UNCTAD has warned that a prolonged invasion of Ukraine could see freight rates inflate to levels that would adversely affect economies and drive up prices even higher for consumers.
They noted in a report that: “Black Sea-Med aframax and suezmax tanker earnings have jumped from about $10,000 a day on February 18 to more than $170,000 a day on February 25. The underlying freight costs have increased by about 400%.”
Trade routes have become more complicated through restricted air spaces, as well as government sanctions on Russian planes entering EU airspaces.
Food prices could rise still further
Whilst many economies struggle to slow inflation growth, numerous world organisations have warned that food prices could rise further and adversely affect poorer households. The Economics Observatory has already reported that food prices have increased since the start of the year, as high as 24% compared to 2021.
Closer to home, the rising cost of food has seen prices increase by 4.3% – the highest for over 10 years.
Slowing growth in the Asia-Pacific region
Sprightly economic growth following the mass relaxation of pandemic restrictions has now slowed, with China in particular expected to see expansion 0.4% lower than expected before the invasion. Worst-case scenarios are pitching China’s total economic growth at just 4% by the end of the year.
Key for organisations including the World Bank though is the impact on poorer and developing nations, especially within the East Asian and Pacific trading zones, where recent global economic shocks could lead to increased poverty.
UK exporters facing difficulties too
Closer to home, importers and exporters in the UK have seen a dampening effect on global trade too, with revenues activity and revenues rising by just 2-3% – half what was expected just two months ago.
Coriolis Technologies chief executive Dr Rebecca Harding said that: “Since 2020 there has been a general drop in exporter activity and so seeing the expected post-Covid rebound fall flat offers little hope for growth as global geopolitical risk heightens.
“Our data has been indicating a decline in exports and exporters since last year, and our forecast is for further downside risk because of sanctions and uncertainty in the wake of the Russia-Ukraine crisis.”