Govt urges umrah pilgrims to remain vigilant amid Mid East tensions

Ngozi Okonjo-Iweala, the director general of the World Trade Organization, told Reuters that the ongoing wars in Ukraine and the Middle East will have a lasting impact on global trade flows. As companies hedge their bets against future shocks, trade contraction has been particularly sharp in the Middle East due to the Iran war, though this is expected to recover over time.

The WTO predicts a 17% drop in exports this year, with imports down about 15%. While private sector experts anticipate a rebound once the war concludes and the Strait of Hormuz reopens, the need for diversification and contingency planning has become apparent, with some alternative trade routes potentially becoming permanent fixtures.

Okonjo-Iweala emphasized the importance of considering choke points and assets in global trade, stating that some of these alternatives will likely endure as countries and businesses seek to mitigate eventualities. She expects further diversification efforts into different regions and countries, driven by repeated trade disruptions, including the US-imposed tariffs under President Donald Trump.

Supply chains have indeed been reconfiguring, with some new trade routes proving more costly but beneficial in the long run. Additionally, regional trade is set to expand, particularly in Africa, where intra-African trade could significantly boost growth and create jobs. Currently accounting for about 20% of African trade, intra-African trade is expected to continue growing, while trade within the European Union remains at about 60%.

The WTO expects global merchandise trade volume growth to reach 3.9% in 2026, up from 1.9% in its March forecast, driven by demand for AI-related products and other factors. Despite the ongoing conflicts and uncertainties, Okonjo-Iweala acknowledged that the future remains uncertain, highlighting the challenges posed by wars, tariffs, and the potential for an AI boom to fade.