WTO Annual Report Urges Reform of Trade Rules, Warns Fragmentation Could Cut 2050 GDP by 5.1%
MacroGeopolitics
The World Trade Organization published its annual report on the 15th, urging member countries to reform global trade rules. It warned that without reform, the world economy will become increasingly fragmented, production will shrink sharply, and poor countries will suffer the most. WTO economists estimate that in a scenario where the world splits into geopolitically rival blocs, global gross domestic product in 2050 would be 5.1% lower and exports 18.6% lower than if no fragmentation occurred. In an even more severe scenario, in which multilateral cooperation collapses and individual free trade agreements proliferate, global GDP would fall by 6.9% and exports by nearly 27%, while stronger multilateral cooperation could raise global GDP by 2.9% and exports by nearly 18%. WTO Chief Economist Rob Staiger told Reuters that the trading system is at a "critical juncture," noting that about 72% of global merchandise trade is still subject to tariffs under WTO most-favored-nation treatment, down from about 80% in 2022, which he called a "concerning trend."
