Although international trade is still far from de-globalization, the World Trade Organization (WTO) warned today that "the first signs of fragmentation" in trade are emerging and is concerned about the impact this phenomenon will have on economic growth and development.

 

Agence France-Presse reports that since the outbreak of the Russia-Ukraine war and China's related blockade measures against the COVID-19 (coronavirus disease 2019) epidemic, which has severely disrupted the global supply chain, the concept of "deglobalization" has become increasingly popular. valued.

 

However, in the annual report on international trade released by the WTO, economists expressed support for "re-globalization" because "the first signs of trade fragmentation may slow down (economic) growth and development."

 

WTO chief economist Ralph Ossa told AFP that global trade has expanded faster than global economic growth for decades, but this trend "did not take hold during the global financial crisis of 2008-2009." It stopped and has been almost stagnant since."

 

Osha said that when the phase of globalization deceleration has passed, the next question is "whether we are moving towards a phase of deglobalization." The WTO report shows that geopolitical tensions are beginning to have an impact on trade flows around the world.

 

"Although we are still quite far away from deglobalization, on the other hand, we are starting to see... the first cracks in the system," Osha said. He pointed out that trade fragmentation usually occurs after geopolitical fragmentation, and in Russia across the board This is especially true after the invasion of Ukraine.

 

The WTO report divides two geopolitical camps based on voting results at the United Nations General Assembly and calculates trade between the two. Although no country was named in the report, tensions between the West and Russia and China have risen in recent years.

 

According to the report, the growth rate of cargo flows between the two camps is 4% to 6% slower than the growth rate of intra-camp trade flows.

 

The WTO warns that the division of world trade into two distinct camps may result in an estimated 5% reduction in global real income, with some developing countries even facing double-digit losses.