The head of the trade organisation predicts that the shocks to the economy will have far-reaching effects, and he is calling for radical policies.
The head of the World Trade Organization said on Tuesday that the world is sliding into a recession because there are many crises going on at the same time.
Ngozi Okonjo-Iweala said at the start of the WTO’s annual public forum in Geneva that the World Bank and the International Monetary Fund have both lowered their predictions for global growth and that trade indicators “don’t look too good.”
Food prices going up, the cost of living going up, and the energy shortage, which were all caused by the Covid-19 pandemic and made worse by the Russia-Ukraine conflict, have set the stage for a global recession.
“I think a worldwide economic slump. I think that’s where we’re headed. But at the same time, we need to think about how to get better. We need to get growth back on track,” Okonjo-Iweala said.
The former finance and foreign minister of Nigeria said that since these shocks are “hitting countries at the same time,” radical policies will be needed to get growth going again.
She said, “Central banks don’t have much of a choice but to tighten and raise interest rates.” She admitted that this would have “quite severe” effects on emerging markets and developing countries.
The head of the WTO also asked central banks to figure out what caused the inflationary crisis and said that food security and access to energy were her top two concerns.