Ngozi Okonjo Iwaela, Nigerian-American Financial economist and leader of the World Trade Organization (WTO) has warned several major economies face a real risk of sliding into recession as the war in Ukraine, rising food and fuel costs, and soaring inflation cloud the global outlook.
This according to Reuters was made known on Wednesday during the G20 leaders meeting that addressed the economic impact of the Russian-Ukrainian war in Bali, Indonesia. The meeting was disrupted by an emergency meeting to discuss reports of a missile landing in Polish territory that added to uncertainty over the economic fallout from the war in Ukraine.
The reigning Director General of WTO was reported to have made the following remarks:
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“It may not happen everywhere, but several key countries risk sliding into recession.
“Of course the impact of that can be quite significant for emerging markets and poor countries, which need external demand from the developed countries to recover.”
“There are so many uncertainties and most of the risks are on the downside,” such as the fallout from the war in Ukraine and headwinds from inflation, she said.
According to Reuters, the WTO had earlier projected global trade to rise just 1.0% in 2023, down sharply from an estimated 3.5% rise for this year.
However, the WTO leader was said to express optimism at the recent posture of the U.S. President Joe Biden and the Chinese leader Xi Jinping to mend strained bilateral ties that are among the uncertainties weighing on the prospects for global recovery.
“One doesn’t want to read too much into it, but it’s always good when the two biggest economies in the world talk to each other,” Okonjo-Iweala said of the U.S.-China summit.
“Certainly with respect to trade, it’s very helpful.”
According to Reuters, Okonjo-Iweala also said she was “very hopeful” some breakthrough will be made in reforming the WTO’s dispute settlement system, which has been paralysed since 2019 when the administration of former U.S. President Donald Trump blocked the appointment of judges for an appeals body arbitrating on global trade disputes.
“The Americans are consulting actively with other members at an informal level,” she said, adding that the stronger U.S. engagement will help speed up progress on reform from the beginning of next year.
Reuters also states, in a meeting in September, trade ministers of the G7 advanced economies agreed to work towards having a functioning WTO dispute settlement system by 2024.