WTO Chief Warns of Potential Trade Impact if Israel-Hamas Conflict Expands
Trade Consequences of the Israel-Hamas Conflict
The World Trade Organization (WTO) chief, Ngozi Okonjo-Iweala, expressed her hope for a swift resolution to the Israel-Hamas conflict. She emphasized that if the conflict were to escalate and spread across the region, it would have a significant negative impact on already weakened global trade flows.
Global Trade Challenges
Okonjo-Iweala, attending the annual meetings of the International Monetary Fund and World Bank in Morocco, highlighted that the Middle East violence, along with other factors such as higher interest rates, China’s property market strain, and the Ukraine-Russia war, could further impede trade growth. These challenges are already contributing to global uncertainty.
Concerns and Hopes for a Resolution
The WTO chief expressed concerns about the potential widening of the conflict, as it would create even more uncertainty and pose a threat to global economic growth. She stressed the importance of containing the situation and avoiding further escalation, as the consequences would be detrimental to trade.
Okonjo-Iweala acknowledged that the current global uncertainty is already hindering trade growth. However, the sudden outbreak of war between Israel and Hamas would exacerbate these challenges and add another layer of uncertainty, casting a dark cloud on the global economic horizon.
WTO’s Revised Growth Forecast
Last week, the WTO halved its growth forecast for global goods trade in 2023 due to persistent inflation, higher interest rates, the slowdown of the Chinese economy, and the Ukraine-Russia conflict. The organization now anticipates a mere 0.8% increase in merchandise trade volumes for that year, compared to the previous estimate of 1.7%. For 2024, the WTO maintained its forecast of 3.3% goods trade growth, unchanged from its previous estimate of 3.2%.
The WTO also warned about signs of trade fragmentation linked to global tensions but did not foresee any evidence of broader de-globalization that could jeopardize its 2024 forecast.
In conclusion, the WTO chief underscored the need for a swift resolution to the Israel-Hamas conflict to prevent further damage to global trade. The ongoing uncertainties and challenges, combined with the potential expansion of the conflict, demand careful attention and prompt action to safeguard the stability of the global economy.
