GENEVA/ISTANBUL, Sept 18 (Bernama-Anadolu) -- Global trade is facing its worst disruption in 80 years as supply chain bottlenecks in the Strait of Hormuz threaten global food and fertiliser prices, the World Trade Organisation's (WTO) director-general warned, Anadolu Ajansi reported.
Ngozi Okonjo-Iweala, speaking on the sidelines of the WTO’s Public Forum in Geneva, told Anadolu that the global trading system remains resilient, but the ongoing West Asia conflict presents a major test for the organisation’s 166 member countries.
She noted that global trade in goods grew by an unexpectedly strong 4.6 per cent this year despite geopolitical pressures, while 72 per cent of all global commerce continued to operate under WTO rules.
The initial projection for overall goods trade growth was 1.9 per cent for the entire year, but the first-quarter growth rate of 3.2 per cent outpaced expectations.
Okonjo-Iweala stated that a significant portion of the momentum was driven by the surging trade in artificial intelligence, which in turn was driven by low- or zero-tariff agreements covering US$3 trillion in global semiconductor and chip shipments.
She urged caution over the sustainability of the trend, while warning that the economic benefits of this booming trade remain concentrated in North America and East Asia, raising concerns about global market inclusivity.
Okonjo-Iweala said national reserves temporarily shielded markets from the shocks that the Strait of Hormuz disruptions have caused thus far, but prolonged blockades in the vital waterway will inevitably lead to higher agricultural costs.
The WTO’s previous estimates showed that crude oil prices reaching US$90 a barrel could drive down overall trade growth by 0.5 points, while current crude oil prices have exceeded that threshold.
Maritime shippers maintained trade volume by rerouting vessels via alternative routes, but these lengthy detours are adding steep premiums, calling into question the long-term stability of the current supply chain, Okonjo-Iweala warned.
Governments around the world are drafting contingency plans to protect their economies from future chokepoint failures, while the combination of supply chain instability and rapid shifts in technology has furthered internal WTO talks over the need to overhaul global trade rules for this century.
-- BERNAMA-ANADOLU