WTO Director-General Ngozi Okonjo-Iweala predicted on Thursday that wars and geopolitical tensions, particularly in the Middle East and Ukraine, will have long-term effects on global trade flows. She noted that countries and companies are strengthening hedging strategies and diversifying supply chains to cope with potential future shocks.
Okonjo-Iweala, in statements to Reuters on the sidelines of the annual meetings of the International Monetary Fund and the World Bank in Bangkok, explained that trade in the Middle East region suffered a significant contraction due to the war with Iran. She pointed out that finding alternative routes and solutions for transporting goods did not prevent this contraction, noting that recovery will take time and that some shifts imposed by the crisis may become permanent.
Decline in exports and imports
She indicated that the WTO expects the region's exports to fall by about 17% this year, compared to a 15% decrease in imports. This reflects the direct impact of disruptions to trade routes and supply chains, prompting the private sector to reconsider its plans. The sector had previously relied on a quick trade recovery after the end of the war and the reopening of the Strait of Hormuz.
Restructuring supply chains
Okonjo-Iweala added that the recurrence of crises and conflicts has reinforced the conviction of companies and governments of the need to diversify trade routes. She emphasized that successive waves of disturbances, including wars, trade restrictions, and tariffs, are pushing the world toward a new phase characterized by the restructuring of supply chains. She also stressed the necessity of distributing risks on a broader scale and establishing emergency plans that reduce dependence on vital transit points.
The Middle East region is one of the most important global trade corridors, as a large portion of energy and international goods trade passes through the Strait of Hormuz and the Bab al-Mandab. The ongoing American-Israeli-Iranian war this year has caused widespread disruptions in navigation and shipping, prompting many global companies to use alternative routes to secure their trade flows and reduce risks associated with geopolitical tensions.
In this context, the WTO Director-General noted that some shifts imposed by the crisis may become permanent, requiring continuous adaptation from actors in the global market.
Source: Syrian Arab News Agency (SANA)
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