Failure to reform WTO could cost global economy 10% of output by 2050

The World Trade Organisation (WTO) warns that a failure to reform and maintain the multilateral trading system could cost the global economy 10 percent of its output by 2050. The WTO's World Trade 2026 report reveals that, in a "geo-fragmented world" where multilateral trade rules erode, global gross domestic product would shrink by 5.1 percent and exports would fall by 18.6 percent.

Even under simulations of a world dominated by free-trade agreements, the WTO estimates a global economic output loss of 6.9 percent and world exports plummeting by almost 27 percent. The gap between strengthened multilateral cooperation and erosion of trade rules amounts to an opportunity cost of 5 to 10 percent of global real GDP, according to the WTO.

WTO Director General Ngozi Okonjo-Iweala stresses that the multilateral trading system has been repaired and renewed before, and believes it can do so again. The report emphasizes that WTO members are actively working on reform, recognizing that the status quo is no longer an option. The WTO's warning about economic losses and plunging exports is timely, given the increasing trade disputes between global economic powerhouses, such as the US-China trade war and the US-Canada trade spat.

Despite these challenges, the WTO's rules remain essential for international commerce, supporting integration and resilience in the global economy. The report highlights that strengthening the global multilateral trading system could yield a 3 percent GDP boost by midcentury, benefiting least-developed countries, high-income economies, and middle-income nations.