The global economy is fragmenting, which could be “very costly” for everyone, according to World Trade Organisation (WTO) Director-General Ngozi Okonjo-Iweala.
In an interview with Nikkei on Sunday, the World Trade Organisation chief expressed concern about the escalation of the Israel-Hamas conflict and its potential impact on global growth if it spreads to the wider Middle East.
“That is one of the regions where a lot of the world’s oil and gas comes out of,” Okonjo-Iweala said. “So inevitably this will have an impact.”
According to the World Trade Organisation, the outlook for 2024 remains relatively optimistic, with growth projected at around 3.3%, “but the risks are heavily skewed to the downside.”
The WTO 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.
