WTO Says Geopolitical Conflicts Could Have Lasting Trade Effects
The wars in Ukraine and the Middle East are likely to have a lasting impact on global trade flows as businesses seek to protect themselves against future disruptions, World Trade Organization Director-General Ngozi Okonjo-Iweala told Reuters on Thursday.
Okonjo-Iweala said trade in the Middle East had contracted sharply because of the war involving Iran, despite efforts by businesses and governments to find alternative ways to move goods. She warned that the recovery could take time and that some of the changes in trade patterns might become permanent.
The comments highlight the growing connection between geopolitical risk and companies’ decisions about where to source products, how to transport goods and which routes to use. The WTO chief said repeated disruptions had encouraged businesses to diversify their arrangements and prepare for future shocks.
Middle East Trade Faces a Difficult Recovery
According to Okonjo-Iweala, the WTO forecast a 17% decline in exports from the Middle East this year, while imports were expected to fall by about 15%.
The trade contraction has occurred despite the use of alternative arrangements intended to keep goods moving during the conflict. The WTO chief said the region’s trade would take time to recover even after the conflict ended.
Some private-sector experts expect trade to rebound when the war ends and the Strait of Hormuz reopens. The waterway offers a cheaper route for moving goods, but repeated disruptions have encouraged companies to develop alternatives.
Companies May Keep Alternative Trade Routes
Okonjo-Iweala said some of the alternative routes adopted during the conflict were likely to remain in use even after conditions improved. Businesses have been reassessing how they move goods to reduce exposure to future disruptions.
This means the impact of geopolitical tensions may extend beyond immediate declines in exports and imports. Changes in transport routes and supply-chain arrangements can continue after the initial disruption has passed.
The WTO’s warning focuses on the possibility that businesses will retain some of these changes as part of their longer-term planning. The report did not suggest that all trade routes would change permanently, but it noted that some of the adjustments made during the conflict could endure.
