On Tuesday, the chief of the World Trade Organization said that she thinks a global recession is imminent due to many interlocking issues and demanded dramatic measures to resurrect the economy.
According to WTO Director-General Ngozi Okonjo-Iweala, the circumstances for a global recession are set by Russia’s conflict in Ukraine, the climate catastrophe, shocks to food and energy prices, and the effects of the CoVid-19 epidemic.
She said at the start of the annual public conference of the international trade organization in Geneva that “now we have to weather what seems like an incoming recession.”
“I predict a worldwide recession. I believe that is where we are headed. However, we also need to begin planning for the recovery. We must reestablish growth.
She said that the World Bank and the International Monetary Fund had lowered their predictions for global growth and that trade indications were “not looking very good.”
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“We cannot afford to do business as usual,” Okonjo-Iweala said. “We have security shocks, climate shocks, energy shocks, and food price shocks all striking nations simultaneously.”
The former finance and foreign minister of Nigeria said that central banks were in a difficult situation and had few options for the future.
She said the consequences for emerging markets and developing nations are severe since they are also tightening and raising interest rates.
“Central banks really don’t have much of a choice except to tighten and raise interest rates,” she said.
“However, what occurs in the developed nations impacts their debt loads, the costs associated with debt servicing, and the flow of capital from their economies and back into the developed countries.
Except given how profoundly inflation affects the poor right now, I believe central banks have no option but to take action.
She emphasized the need for central banks to ascertain if high demand is causing inflation or whether the increase in prices is related to structural issues on the supply side.
Okonjo-Iweala said that access to electricity and ensuring food security were her main concerns.
I worry about the possibility of not having enough food, she said.