World Trade Organization (WTO) Chief Ngozi Okonjo-Iweala on Thursday (October 12) expressed her hope for the Israel-Hamas conflict to end quickly. She warned that if the conflict widened throughout the region, then it would have a “really big impact” on already weak global trade flows.
“There’s uncertainty about whether this is going to spread further to the whole region, which could impact very much on global economic growth,” she said. “We hope that all the violence will end… because it does create this uncertainty.”
Ngozi Okonjo-Iweala, who is currently in Morocco attending this week’s annual meetings of the International Monetary Fund and World Bank, emphasized that global trade growth was already being hindered by various uncertainties. These uncertainties include the potential for increased trade restrictions and disruptions due to elevated interest rates, a stressed Chinese real estate market, and the ongoing conflict in Ukraine instigated by Russia.
Furthermore, the sudden outbreak of hostilities between Israel and the Islamist Hamas group, which governs the Gaza Strip, could exacerbate the challenges faced by global trade. Okonjo-Iweala expressed concern that the ongoing Middle East violence might not be limited to its current location and could potentially spread to affect the broader region. Such an escalation has the potential to significantly impact global economic growth.
In her statement, the head of the WTO highlighted the importance of resolving this conflict to mitigate the uncertainty it generates, and said, “There is uncertainty about whether this is going to spread further to the whole region, which could impact very much on global economic growth,” she said. “We hope it will end because it does create this uncertainty. It’s another dark cloud on the horizon.”
The WTO has revised its projections for merchandise trade volumes in 2023, lowering the expected growth to just 0.8%, down from its earlier estimate of 1.7% made in April. Looking ahead to 2024, the WTO anticipates goods trade growth to reach 3.3%, a forecast that remains largely consistent with its previous estimate of 3.2% in April.
While the 164-member organization expressed concern about potential signs of trade fragmentation stemming from global tensions, it emphasized that there is no clear evidence of a broader trend towards de-globalization that would jeopardize the trade growth forecast for 2024.