Okonjo-Iweala urges collaborations to avert economic disaster

Amid rising global trade tensions and looming economic fragmentation, World Trade Organisation Director-General Ngozi Okonjo-Iweala has issued a stark warning to world leaders, calling for collaboration and reforms to avert potential economic disaster.

Speaking at the recently concluded World Economic Forum in Davos, Switzerland, Okonjo-Iweala urged policymakers to “just chill” and consider the long-term consequences of retaliatory trade measures.

Her observations came during a week dominated by discussions on trade uncertainties and economic resilience. At an informal ministerial meeting hosted by Switzerland, global ministers reiterated their “strong support” for the World Trade Organisation and its role in maintaining a transparent, rules-based trading system.

In a session titled ‘Finding Growth in Uncertain Times’, Okonjo-Iweala emphasised the resilience of trade despite recent crises and highlighted the transformative potential of artificial intelligence for global commerce.

“Trade will still be a source of growth,” she declared, referencing WTO research that forecasts double-digit trade growth if AI tools are widely adopted. These technologies, she noted, can slash trade costs and boost productivity.

She, however, painted a grim picture of the dangers of economic fragmentation, cautioning that dividing the world into competing trade blocs could slash global GDP by 6.4 per cent—equivalent to losing the combined economies of Japan and South Korea.

“This is not a road we want to go down,” Okonjo-Iweala stressed.

Recently, during a session on climate-trade dynamics, Okonjo-Iweala underlined the symbiotic relationship between trade and the green economy.

“You can’t have the adoption of clean energy technology without trade,” she said, admonishing countries to focus on exporting goods that align with their environmental comparative advantages.

The risks of escalating tariff wars were a focal point at the town hall debate on January 23, where Okonjo-Iweala addressed potential new U.S. tariffs.

“It is easy to use tariffs—it’s an attractive tool—but history warns us of the consequences,” she said.

Okonjo-Iweala drew parallels to the 1930s when retaliatory tariffs worsened the Great Depression.

“If we spiral into tit-for-tat retaliation, global GDP losses could reach double digits. That’s catastrophic for everyone, especially poorer nations,” she added.

Concluding her engagements, Okonjo-Iweala attended a ministerial meeting on WTO reforms, pushing for modernisation ahead of the 14th WTO Ministerial Conference in 2026. “The context is changing; we must deliver, and we must modernise,” she urged.

Ministers echoed her call, underscoring the importance of the WTO in ensuring a predictable and fair trading system.

Okonjo-Iweala’s message in Davos was clear: trade cooperation, reform, and innovation are imperative to avert global economic calamity.