‘Seun Ibukun-Oni, Abuja – The World Trade Organisation (WTO) has warned that the world is edging into a global recession due to multiple colliding crises.
WTO Director-General, Ngozi Okonjo-Iweala, who sounded the warning on Tuesday, however, called for radical policies to revive growth.
She said Russia’s war in Ukraine, the climate crisis, food prices, and energy shocks, along with the aftermath of the Covid-19 pandemic, were creating the conditions for a world recession.
“Now we have to weather what looks like an oncoming recession”, she told the opening of the global trade body’s annual public forum in Geneva.
“I think a global recession. That’s what I think we are edging into. But at the same time, we have to start thinking of recovery. We have to restore growth”, she said.
Okonjo-Iweala noted that the World Bank and the International Monetary Fund had both downgraded global growth forecasts, while indicators on trade numbers were ‘not looking too good’.
“We have security shocks, we have climate shocks, we have energy shocks, we have food price shocks, and all of these are hitting countries at the same time, so we cannot afford to do business as usual”, she added.
The former Nigerian finance and foreign minister said central banks were in a tight spot, with little choice over the course ahead.
“Central banks don’t really have too much of a choice but to tighten and increase interest rates — but the repercussions on emerging markets and developing countries is quite severe because they too are tightening an increase in interest rates.
“But what happens in the developed countries affects their debt burdens, affects what they have to pay to service debt, affects the flight of capital from their economies back into the developed countries.
“But right now, I think there’s not much choice but for central banks to act because inflation really hits at the poor very badly”, she said.
She stressed the need for central banks to determine whether inflation was being caused by strong demand or whether the rise in prices was linked to structural problems on the supply side.
Okonjo-Iweala said her top concern was how to ensure food security, followed by access to energy.
“The spectre of not having enough food is one that worries me”, she said.