The situation between Russia and Ukraine “endangers fragile recovery of world trade”, and not only global industries, such as commodity trading or food trade, will suffer – the service sector and tourism, as one of its main parts, will also be at risk. This assessment was voiced by experts from the World Trade Organization.
Overall, they restated the outlook as follows: the organization expects merchandise trade to grow by 3.0% in 2022, below its previous forecast of 4.7%, and by 3.4% in 2023. “But these estimates are less accurate than usual,” the WTO warned separately. “Despite their small share in world trade and production, Russia and Ukraine are key suppliers of essential goods, including food, energy and fertilizers,” the association noted. Adds problems and again closed “for covid” China, whose lockdowns turn out to be “violating maritime trade.” “This could lead to a new shortage of productive resources and an increase in inflation,” WTO experts assure.
In particular, they analyzed the fate of tourism, noting that last year the world trade in commercial services grew by 15%, which was facilitated by the demand for transport services – i.e. air travel, which grew by 33%. “Growth in tourism exports was positive but remained weak as travel restrictions were only partially lifted during the year,” the experts added. And then they said that anti-Russian sanctions “are likely to have a strong impact on trade in commercial services. “Russia is a net importer of services: in 2021, imports amounted to $74 billion and exports to $55 billion. Russia ranks 24th among exporters of services (13th excluding trade within the EU) with a share of 0.9% in world trade. It ranks 19th among importers (11th excluding within the EU) with a share of 1.4% in world trade,” the WTO said.
At the same time, in the “pre-Covid” time, the EU accounted for more than 42% of Russian imports of services and 31.1% of exports of services. In the same year, Russia also purchased services from Turkey (7.7%), the UK (5.1%), the US (4.0%), China (3.7%) and Switzerland (3.3%). At the same time, the WTO emphasizes that it was travel/tourism and air transportation services that in pre-Covid times were the largest services traded by Russia, accounting for 46% of its exports and 36% of its imports. “These services, already hard hit by the pandemic, could be hit hard by economic sanctions,” they note.
By the way, an interesting point – then the WTO experts noted the high vulnerability that Ireland now risks “due to the country's significant role in the operational leasing of aircraft.” “In general, Russian payments for operational leasing of aircraft from the EU in 2019 reached $3.9 billion, of which $2.6 billion came from leasing services from Ireland. In 2020, Russian imports of operating leases fell by 44% due to pandemic-related travel restrictions,” experts said.
For those who care about a healthy lifestyle, we recommend reading: when kefir becomes dangerous.”
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