The director general of the World Trade Organization (WTO) predicted on Tuesday a “world recession” in a context of “multiple crises” on the planet and urged the implementation of radical policies to stimulate growth.
At the opening of the organization’s annual public forum in Geneva, Ngozi Okonjo-Iweala noted that the organization hoped for a recovery from the covid pandemic.
“I think of a global recession. I think we are heading towards that. But at the same time we must start thinking about recovery. We must restore growth,” said the director general of the agency.
Okonjo-Iweala indicated that the war in Ukraine, the climate crisis, the level of food and energy prices, added to the consequences of the covid pandemic, create conditions for a global recession to occur.
The official highlighted that both the World Bank and the International Monetary Fund cut their forecasts for the world economy and also pointed out that the trade figures do not look “good.”
For Okonjo-Iweala it is necessary to reflect on what is going to be implemented and that in the short term the main concern is how to “ensure food security”, also pointing out his concern about access to energy.
Okonjo-Iweala stated that central banks “have no choice” but to raise interest rates due to inflation.
However, he explained that this measure is going to have “quite serious” effects on developing countries for whom debt compliance is going to become heavier.
He also highlighted the importance for central banks to determine whether inflation is caused by strong demand or whether rising prices are linked to structural reasons on the supply side.
“If we are dealing with supply-side factors over which there is no control, continuing to raise interest rates would be counterproductive,” he warned.