According to the World Trade Organization (WTO) report for 2023, Western sanctions imposed on Russia due to the military operation in Ukraine are expected to have a negative impact on most economies worldwide.
The report suggests that even bilateral trade tensions can reduce growth in countries that are highly integrated into the global economy. For instance, tensions between the United States and China have already resulted in welfare losses of 0.3% of GDP in China and 0.1% of GDP in the US.
The report further states that the economic sanctions imposed on Russia in response to the war in Ukraine are projected to have a significant negative impact on most economies, with Russia experiencing the largest decline in real GDP.
However, the WTO notes that geopolitical tensions typically affect only the economies of a few countries involved in the trade disruption, while neutral third countries may actually benefit.
As an example, the organization highlights the transfer of American manufacturing capacity from China to other countries, such as Vietnam. From 2017 to 2020, Vietnam witnessed a 40% increase in exports of goods to the United States.
The WTO emphasizes that the impact on GDP growth prospects will ultimately depend on various factors, including relative advantages, export potential, and geographic proximity to countries that have severed trade ties.