Director-General of the World Trade Organisation and Nigeria’s former Finance Minister, Ngozi Okonjo-Iweala, on Tuesday warned that the world may be heading fast towards a global recession due to multiple colliding crises.
She, therefore, called for radical policies aimed at restoring the growth of the economies of the world.
Okonjo-Iweala listed the Russian war with Ukraine, climate crisis, food price and energy shocks, plus the aftermath of the Covid-19 pandemic as creating fertile grounds for a global economic recession.
Speaking at the opening of the global trade body’s annual public forum in Geneva, Okonjo-Iweala stated that “Now we have to weather what looks like an oncoming recession.”
She added that “I think a global recession. That’s what I think we are edging into. But at the same time, we have to start thinking of recovery. We have to restore growth.”
The WTO boss noted that the World Bank and the International Monetary Fund had both downgraded global growth forecasts, while indicators on trade numbers were “not looking too good.”
Okonjo-Iweala added that “We have security shocks, we have climate shocks, we have energy shocks, we have food price shocks, and all of this is hitting countries at the same time, so we cannot afford to do business as usual.”
She argued that central banks were in a tight spot, with little choice over the course ahead.
“Central banks don’t really have too much of a choice but to tighten and increase interest rates — but the repercussions on emerging markets and developing countries is quite severe because they too are tightening an increase in interest rates.
“But what happens in the developed countries affects their debt burdens, affects what they have to pay to service debt, affects the flight of capital from their economies back into the developed countries.
“But right now, I think there’s not much choice but for central banks to act because inflation really hits at the poor very badly,” she said.
She stressed the need for central banks to determine whether inflation was being caused by strong demand or whether the rise in prices was linked to structural problems on the supply side.
She emphasized that her major concern was how to ensure food security, followed by access to energy.
“The spectre of not having enough food is one that worries me,” she declared.