Analysis-Global trade rift widening as Ukraine war passes two-year mark
By Philip Blenkinsop
BRUSSELS (Reuters) — Two years after Russia's invasion of Ukraine, there are clear signs that the global economy is fragmenting into two separate blocs and that multilateral trade rules that have underpinned commerce for nearly 30 years are under threat.
Rising geopolitical tensions, including in the Middle East, and concerns over economic security are leading to sanctions, trade curbs and signs of a widening split between countries supporting Russia and those backing Ukraine.
The World Trade Organization, which hosts its biennial ministerial conference to debate global trade rules next week, has warned that an outright fragmentation into two rival blocs would shrink the global economy by 5%, with developing countries suffering the most.
In this extreme scenario, the United States and China and their allies would be engaged in a bipolar trade war and the respective blocs would set their own rules, disregarding multilateral agreements.
We are not yet at that point, but WTO economists have shown that since Russia's invasion in February 2022, the two blocs are pulling apart.
«We find early evidence of a trend towards a stronger alignment between trade flows and geopolitical affinities since the onset of the war in Ukraine,» they said in a report.
«Our findings point to the first signs of fragmentation in global trade.»
They split the world based on different United Nations voting patterns, including but not limited to resolutions on the Ukraine war. They exclude Ukraine, Russia and Russian ally Belarus to remove the impact of sanctions and the war itself.
Their finding is that trade in goods between the blocs has grown 4% slower than trade within blocs.
While the economists showed signs of
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