Okonjo-Iweala Calls for Unity to Prevent Economic Crisis

World Trade Organization Director-General Ngozi Okonjo-Iweala has strongly warned against economic fragmentation, urging global leaders to embrace trade reforms and cooperation.

At the recently concluded World Economic Forum in Davos, Switzerland, WTO Director-General Ngozi Okonjo-Iweala urged policymakers to take a step back and carefully assess the long-term impact of retaliatory trade measures, advising them to “just chill.”

She emphasized the importance of a stable and cooperative global trade environment; warning that escalating tensions could lead to further economic fragmentation. Meanwhile, global ministers reaffirmed their strong support for the WTO, underscoring its critical role in upholding a transparent, rules-based trading system essential for global economic stability.

WTO Director-General Ngozi Okonjo-Iweala highlighted the resilience of global trade despite recent economic challenges, stressing its ability to withstand disruptions. She pointed to artificial intelligence’s transformative potential in shaping commerce’s future.

Okonjo-Iweala noted that AI-driven efficiencies could significantly boost trade, driving double-digit growth by reducing costs and enhancing industry productivity.

The World Trade Organization (WTO) has warned that increasing geopolitical trade fragmentation could have severe economic consequences. According to WTO calculations, dividing global trade into two competing blocs would create significant policy uncertainty, resulting in a projected 6.4% decline in global real GDP over the long term. This would translate to a staggering $6.7 trillion loss—equivalent to the combined economies of Japan and South Korea. The WTO stresses that such fragmentation would be detrimental to all nations, posing long-term risks to global economic stability.

Speaking on the issue, WTO Director-General Ngozi Okonjo-Iweala cautioned against retaliatory trade policies, drawing historical parallels to the 1930s. She said: “We do not want to encourage tit-for-tat. We have been there before in the 1930s, and it worsened the Great Depression. We are going to see double-digit global GDP losses. Everyone will pay, and poor countries will pay even more. We have seen this movie before, and this would not be a good rerun if we decide we want to watch this movie again.”

Global ministers echoed her concerns, reaffirming their strong support for the WTO’s role in maintaining a transparent and rules-based trading system. They emphasized the need for stability, fairness, and predictability in global trade policies. The WTO continues to advocate for global cooperation and policy reforms to prevent economic instability and protect vulnerable economies from the fallout of rising trade tensions.