WTO Director-General Ngozi Okonjo-Iweala
(Singapore, 28/09/2022) The World Trade Organisation’s (WTO) chief warns that the world is heading towards a global recession due to multiple colliding crises.
WTO Director-General Ngozi Okonjo-Iweala said Russia-Ukraine war, the climate crisis, food prices and energy shocks, plus the aftermath of the Covid-19 pandemic, were creating the conditions for a world recession.
“Now, we have to weather what looks like an oncoming recession,” she told the opening of the WTO’s annual public forum in Geneva.
“I think a global recession, that’s what I think we are edging into. But at the same time, we have to start thinking of the recovery. We have to restore growth.”
She noted that the World Bank and the International Monetary Fund had both downgraded global growth forecasts, while indicators on trade numbers were “not looking too good”.
Okonjo-Iweala added: “We have security shocks, we have climate shocks, we have energy shocks, we have food price shocks, and all of this hitting countries at the same time, so we cannot afford to do business as usual.”
The former Nigerian finance and foreign minister said central banks are now in a difficult situation and have little options over the course ahead.
“Central banks don’t really have too much of a choice but to tighten and increase interest rates – but the repercussions on emerging markets and developing countries is quite severe, because they too are tightening an increase in interest rates,” she said.
“But what happens in the developed countries affects their debt burdens, affects what they have to pay to service debt, affects the flight of capital from their economies back into the developed countries.
She stressed the need for central banks to determine whether inflation was caused by strong demand or whether the rise in prices was linked to structural problems on the supply side.
Okonjo-Iweala said her top concern was how to ensure food security, followed by access to energy.
Besides, Okonjo-Iweala told Reuters in an interview that the WTO can negotiate more ambitious deals, such as on agriculture, climate change and internal reforms by its next major meeting, following a series of trade deals reached in June this year.
She said the series of agreements reached last time had provided the basis “where we can hope to move forward and look at other difficult issues”. She hopes to reach agreement on some issues by the 13th WTO Ministerial Conference, which is scheduled to take place no later than March 2024.