First, it was the pandemic. Then came the Russia-Ukraine war. With two major global crises back-to-back, there could be some lasting changes in supply chains and trade, experts warn.
The war in Ukraine, in particular, has caused countries to think about the need for more dependable trading partners.
“If the Covid-19 pandemic highlighted a need to shorten supply chains, the war in Ukraine underscores the importance to have reliable trading partners,” said Peter Martin, research director at commodity research firm Wood Mackenzie.
Energy prices soared this year as Russia’s onslaught in Ukraine destabilized the markets and Western nations slapped sanctions on Moscow.
This week, the European Union agreed to ban 90% of Russian oil imports by the end of this year. Moscow also previously threatened to cut off supply in retaliation. That has driven a Russian official to say the country will find other importers — oil purchases from China and India have already shot up this year.
The European Union receives about 40% of its natural gas from Russian pipelines and about a quarter of that flows through Ukraine.
Crucial grain exports, such as wheat, have been affected.
Millions of tons of wheat from Ukraine, one of the world’s biggest wheat exporters, have been stuck in the country, unable to get to countries that need them. That’s because Russia’s military forces have been blocking the Black Sea, where key Ukrainian ports are.
Winners and losers
Any diversion as a result of changes to global trade would cause some economies to benefit, such as Southeast Asia, Latin America and Africa, according to Martin.
“Exports will … be diverted requiring new markets to be found for goods and services, and logistics put in place to accommodate the new trade flows,” he said.
“Russia will likely be the biggest loser as, although it can pivot some trade links, it will become excluded from a large proportion of the global economy,” Martin said.