According to the website of Japan's Nikkei Asia magazine on October 30th, World Trade Organization Director General Ngozi Okonjo Ivira stated on October 29th that the global economy has not yet accepted "decoupling", but is beginning to show signs of division, which will be "very expensive" for everyone.
The WTO Director General also issued an alert on the potential impact of the war between Israel and Hamas and the ongoing threat of climate change.
Okonjo Ivira told a reporter from Nikkei Asia magazine, "The outlook for 2024 is still relatively optimistic, and it is expected that trade in goods will grow by about 3.3%, but there are significant downside risks
Since the then US President Trump announced the US withdrawal from the Trans Pacific Partnership Agreement in 2017, global free trade has faced a revised headwind. Under the leadership of his successor Biden, the United States sought to restrict China's access to advanced technologies in semiconductors and other fields, and to engage partners including Japan and some European countries in their so-called "risk reduction" strategy.
Okonjo Ivira said that the World Trade Organization has not seen any clear signs of 'de globalization' on a larger scale.
She said that the volume of trade in goods and services (globally) is still quite considerable, at approximately $31 trillion, and even trade between China and the United States, China and the European Union is relatively strong.
However, the WTO Director General stated that some emerging signs of global economic "fragmentation" should be treated with caution.
Okonjo Ivira said, "Intermediate products are an indicator of the health of global supply chains. We have seen that the share of intermediate products in world trade has decreased from an average of about 51% in the past three years to 48.5% in the first half of 2023. Therefore, we are a bit concerned about this
The World Trade Organization estimates that if the world economy "decouples" and splits into two trading blocs, then in the long run, the global gross domestic product will fall by 5%.
She said that this would be a "huge loss. It would be equivalent to losing the entire Japanese economy".
She said that the World Trade Organization hopes member countries to support free, stable, and predictable trade flows, "because we believe that without a free and fair trading system, we cannot solve the current problems in the world.
The World Trade Organization this month lowered its forecast for global trade in goods growth in 2023 to 0.8% from its April forecast of 1.7%.
It is expected that (global) trade growth will recover to 3.3% by 2024, but there are risks including ongoing conflicts in the Middle East.
Ivira said, "That's one of the regions in the world that produces a lot of oil and gas. Therefore, this will inevitably have an impact.
