Why WTO chief warned of recession in key global economies

economy

by 5paisa Research Team Last Updated: Dec 13, 2022 - 12:35 pm 10.1k Views
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There could be a real risk of recession in some global economies, the chief of the World Trade Organization (WTO) has said. 

The WTO chief warned that 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.

"It may not happen everywhere, but several key countries risk sliding into recession," WTO Director-General Ngozi Okonjo-Iweala told Reuters on the sidelines of the G20 leaders' meeting in Bali, Indonesia.

"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.

Okonjo-Iweala said she has called on G20 leaders to phase out food export restrictions, which have been on the rise and hurt poor countries by pushing up food prices.

What are the WTO’s trade projections looking like?

The Geneva-based trade body last month projected global trade to rise just 1.0% in 2023, down sharply from an estimated 3.5% rise for this year.

But are there any bright spots according to the WTO chief?

Yes. Among the few bright spots that she noted, U.S. President Joe Biden and Chinese leader Xi Jinping met on the sidelines of the G20 summit 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."

What did the WTO chief say about the organisation’s dispute resolution mechanism?

Okonjo-Iweala 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.
 

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