“The recession is coming, the indicators are not positive at a time when both the World Bank and the International Monetary Fund have updated their growth forecasts downwards,” Ngozi Okonjo-Iweala said on Tuesday at the opening of the annual public forum of the World Trade Organization (WTO).
The director of the organization said that a recovery was expected after the Covid-19 pandemic, but that it does not seem that it will occur.
“I think of a global recession. I think we’re heading towards that. But at the same time we need to start thinking about recovery. We must restore growth,” he said.
Okonjo-Iweala indicated that the war in Ukraine, the climate crisis, the level of food and energy prices, together with the consequences of the pandemic create the conditions for a global recession.
The official also pointed out that the trade figures do not look “good”. “We can’t go on like nothing, we have to think of new ideas,” the Nigerian policy summed up.
For Okonjo-Iweala it is necessary to reflect on what is going to be implemented and that in the short term the main concern is how to “ensure food security”, also pointing out his concern about access to energy.
And he admitted that central banks “have no choice” but to raise interest rates due to inflation, something that is going to have “quite serious” effects on developing countries, for whom debt compliance is going to become heavier.
“These economies are also adjusting their policies and raising rates, but those dictated by developed countries affect their debt and capital outflows, so it is difficult to assess these measures,” said Ngozi, the first woman to lead the WTO.
He also stressed the importance of central banks determining whether inflation is driven by strong demand or whether rising prices are linked to supply-side structural reasons.
“If it comes to supply-side factors that there is no control over, continuing to raise interest rates would be counterproductive,” he warned.
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