The World Trade Organisation has warned that the global economy is showing signs of fragmentation, which could be “very costly” for all.
The WTO Director-General, Ngozi Okonjo-Iweala, gave the warning in an interview with Nikkei on Sunday, according to RT’s report.
Okonjo-Iweala raised concerns about the escalation of the Israel-Hamas conflict and its potential impact on global growth if it spills over to the wider Middle East.
She said, “That is one of the regions where a lot of the world’s oil and gas comes out of. So inevitably this will have an impact.”
According to Okonjo-Iweala, the outlook for 2024 is still relatively optimistic, with growth projected at about 3.3%, “but the risks are heavy to the downside.”
She estimated that if the world splits into two trading blocs, global GDP will drop 5% in the longer term.
This would be a “huge loss,” Okonjo-Iweala cautioned, equating it to losing the entire economy of Japan.
Nevertheless, the WTO does not see “big signs of a broader de-globalization,” according to its chief, who said the volume of trade in goods and services is “still quite substantial,” at about $31 trillion.
Earlier this month, the WTO slashed its 2023 forecast for global trade growth to 0.8% from the previously estimated 1.7%, citing a deepening manufacturing slowdown.