The World Trade Organization (WTO) warned on Tuesday that global GDP could fall by up to 10% by 2050 if global cooperation collapses and is replaced by bilateral free trade agreements. The report analyzes various scenarios in light of growing geopolitical and trade tensions, pointing out that global GDP could grow 2.9% (three trillion dollars) over the next 25 years if multilateralism is strengthened, but would result in a 6.9% decline relative to current values in a pessimistic scenario dominated by bilateral agreements.
The effects would be most notable in less developed economies, with a range oscillating between growth of 7.7% with multilateral cooperation and a decline of 16.5% with greater protectionism. Exports would be even more affected, with a possible drop of 26.9% versus growth of 17.9% in the more collaborative scenario. The least developed countries would face an increase of 45% in exports or a decrease of 45.4% in cases of greater or lesser cooperation, respectively.
The WTO Chief Economist, Robert Staiger, emphasized that the document is not a call for the preservation of the multilateral system unchanged, but rather a call to adapt, repair what is broken, update what is obsolete, and preserve what works. He also highlighted that international trade is subject to many pressures that are a consequence of its own success, and that approximately 72% of world merchandise trade continues to be conducted through most-favored-nation agreements, although this figure is far from the 80% recorded just two years ago.
The WTO Director-General, Ngozi Okonjo-Iweala, noted that the trade landscape has changed considerably, but that the founding logic that all economies benefit more from cooperation than from unilateral action remains as valid as ever. The organization adds that WTO membership has increased trade among its 166 members by almost 2.5 times.
