Okonjo-Iweala Warns of Economic Catastrophe, Calls for Global Trade Cooperation

Okonjo-Iweala Advocates Global Collaboration to Prevent Economic Crisis

Amid escalating global trade tensions and the threat of economic fragmentation, World Trade Organization (WTO) Director-General, Ngozi Okonjo-Iweala, has issued a stark warning to world leaders, urging collaborative efforts and structural reforms to forestall potential economic turmoil.

Addressing the World Economic Forum in Davos, Switzerland, Okonjo-Iweala cautioned policymakers against impulsive retaliatory trade measures, advising them to “just chill” and consider the long-term repercussions of such actions.

Her remarks were delivered during a forum marked by intense discussions on trade uncertainties and economic resilience. At a ministerial meeting hosted by Switzerland, global ministers reaffirmed their “strong support” for the WTO and its role in upholding a   transparent, rules-based international trading system.

During a session titled  ‘Finding Growth in Uncertain Times’, Okonjo-Iweala underscored the resilience of global trade, even in the face of recent crises, and highlighted the transformative potential of artificial intelligence (AI) in reshaping international commerce.

“Trade will still be a source of growth,”she asserted, referencing WTO research that predicts double-digit trade growth with the widespread adoption of AI tools. She noted that these technologies could significantly reduce trade costs and enhance productivity.

However, she painted a dire picture of economic fragmentation, warning that dividing the world into rival trade blocs could shrink global GDP by 6.4%—a loss equivalent to the combined economies of Japan and South Korea.

“This is not a road we want to go down,” she stressed.

At a session on climate-trade dynamics, Okonjo-Iweala emphasized the intrinsic link between trade and the green economy, urging nations to focus on exporting goods that align with their  environmental comparative advantages.

“You can’t have the adoption of clean energy technology without trade,” she stated.

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

“It is easy to use tariffs—it’s an attractive tool—but history warns us of the consequences,” she remarked, drawing historical parallels to the  1930s, when retaliatory tariffs exacerbated 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 warned.

Concluding her engagements in Davos, Okonjo-Iweala participated in a ministerial meeting on WTO reforms, advocating for the  modernization of the global trading system 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 concerns, reaffirming the WTO’s role in ensuring a predictable, equitable, and stable global trading environment.

Okonjo-Iweala’s resounding message in Davos was clear: global trade cooperation, reform, and innovation are essential to avert an impending economic catastrophe.