Trade makes the world go round. This sector is as old as time and has always been a core determinant of who gets a seat at the “World Powers” table. When global trade is troubled, the world is unsettled. That’s why it became worrisome when the World Trade Organisation halved its global goods trade forecast for 2023 to 0.8%. It’s a lot lower than the trend over the last two decades. COVID and the wars in Ukraine and the Red Sea have caused continuous supply shocks and made trade challenging. So, it’s no surprise that inflation, poverty and unemployment rates have risen in many countries.

At the World Economic Forum 2024, Dr Ngozi Okonjo-Iweala, Director-General of the World Trade Organization, said the world economy won’t experience recovery without trade and investment. The last time the global economy had high growth, trade was the engine behind it. Yet, she’s “less optimistic” about this year’s outlook for the sector. “…Going into this year, we were more optimistic, and we projected 3.3% [growth]. But the concerns about what is going on in the Red Sea and the Suez Canal and… climate change drought in the Panama Canal… make us slightly less optimistic,” she said during a panel held on Thursday, January 18th. “Nevertheless, it’s still better than last year.”

However, she sees some “bright spots” that call for bullish sentiments. “Services grew for the first nine months of last year at an annualised rate of about 9%. And within that, digitally delivered services are growing very fast,” she explained. “We are also bullish about green trade. Over the past decade, green trade has tripled to about $1.9 trillion.”

The panel, which included Valdis Dombrovskis, Ngozi Okonjo-Iweala, Khaldoon Khalifa Al Mubarak, Chrystia Freeland, Brian Moynihan, Børge Brende seemed to agree that the future of trade rests on fostering globalisation. Deglobalisation would negatively affect everyone, especially emerging economies. “We say the future of trade is services; it’s digital; it’s green. And it should be inclusive” Okonjo-Iweala said.

The conflicts that happened in major economies have made many countries prioritise national security in their trade policy. Many nations have also started questioning their over-reliance on some countries for critical goods and services. As a result, there’s a risk of “friend-sharing”, which would distribute the gains of economic growth unequally. “When we talk of ‘friend-sharing,’ I don’t know who is a friend,” she added. “I don’t ever hear countries in Africa mentioned.” The World Trade Organisation is creating a trade agenda that prioritises inclusivity and decarbonisation. “Yes, we are worried. But remember, trade is very resilient.”

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