Global trade is facing its most serious disruption in decades as supply chain problems around the Strait of Hormuz threaten to push up food and fertilizer prices, according to World Trade Organization Director-General Ngozi Okonjo-Iweala.
Speaking during the WTO Public Forum in Geneva, Okonjo-Iweala said the international trading system had remained relatively strong despite geopolitical tensions. She noted that global goods trade expanded by 4.6% this year, significantly above the earlier full-year forecast of 1.9%. About 72% of global trade continues to operate under WTO rules.
She said much of the unexpected growth was linked to rapidly expanding trade in artificial intelligence technologies, supported by low- and zero-tariff arrangements covering around $3 trillion in semiconductor and chip trade. However, she cautioned that these gains are heavily concentrated in North America and East Asia, creating concerns about equal access to economic opportunities.
The WTO chief warned that disruptions in the Strait of Hormuz could become increasingly costly if they continue. National reserves have so far helped limit the impact, but extended blockades of the strategic waterway could raise agricultural expenses and put additional pressure on global markets.
Previous WTO estimates suggested that crude oil prices reaching $90 per barrel could reduce global trade growth by 0.5 percentage points. Oil prices have now moved beyond that level, adding to concerns over the outlook.
Shipping companies have maintained trade flows by diverting vessels through alternative routes. However, longer journeys have increased transportation costs and premiums, creating additional pressure on already vulnerable supply chains.
Governments are preparing contingency measures to protect their economies from future disruptions at major trade chokepoints. At the same time, technological changes and supply chain instability have intensified discussions within the WTO about updating international trade rules.
Okonjo-Iweala emphasized that institutional reform is necessary to make global economic growth more inclusive, arguing that the existing WTO framework has often failed to adequately serve developing economies. She called for greater participation from developing countries in designing new trade policies.
A recent WTO report warned that weakened international cooperation and failure to modernize trade regulations could reduce potential global economic growth by as much as 10% by 2050.
NEWS DESK
PRESS UPDATE