The Director-General of the World Trade Organization, Ngozi Okonjo-Iweala, warned on Tuesday that the world is on the verge of a “global recession” at a time when it is facing “multiple crises.”
Speaking at the opening of the organization’s annual general forum in Geneva, Okonjo-Iweala said that expectations had previously indicated a “post-epidemic recovery.”
And she continued, “But now we have to face signs of an upcoming recession,” stressing that it is a “global recession.”
“I think that’s where we’re headed,” she said. But at the same time, we have to start thinking about recovery. We have to get back to growth.”
But she stressed that the situation is “very difficult”, as the world faces “multiple crises”, including insecurity, climate shocks and the rise in food prices, which in her opinion are “simultaneous external shocks” that put the world in a fragile position.
“We have to think about what we need to do, about the policies that need to be followed to return to growth,” she added.
She considered that the most urgent matter in the short term is to know “how to ensure food security” in the world, expressing her concern also about the issues of access to energy.
On Monday, the Organization for Economic Cooperation and Development predicted that the world will continue to pay a heavy price for the war on Ukraine, and it has clearly lowered its forecast for global growth next year in the face of more sustainable effects than expected, as well as central banks raising interest rates to contain inflation.
Commenting on this last issue, Okonjo-Iweala said, “Central banks really have no choice” but to raise interest rates due to inflation.
But she pointed out that this increase has “serious repercussions” on developing countries, which will face an increase in the burden of servicing their debts.
She also stressed the importance of central banks determining whether inflation is caused by strong demand or by structural causes on the supply side.
And she warned that “if it is about uncontrollable supply-related factors, then continuing to increase interest rates will be counterproductive.”
By: Mehdi Jabrane