Prolonged Israel-Hamas conflict will have negative impact on global trade—Okonjo-Iweala

Director General of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, on Friday expressed her optimism for a speedy resolution to the Israel-Hamas conflict and cautioned that if it spread throughout the region, it would have a “really big impact” on already fragile global trade flows.

While attending this week’s annual meetings of the International Monetary Fund and the World Bank in Morocco, Okonjo-Iweala warned that the violence in the Middle East could exacerbate other issues that are already impeding trade development, such as increased interest rates, a tense Chinese real estate market, and Russia’s conflict in Ukraine.

“We hope this ends soon and it’s contained. Our biggest fear is if it widens, because that will then have a really big impact on trade,” she said in an interview with Reuters. “Everybody’s on eggshells and hoping for the best.”

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Okonjo-Iweala said global uncertainty was already limiting growth in trade, but that would be exacerbated by the sudden onset of war between Israel and the Islamist Hamas group that controls the Gaza Strip.

“There is uncertainty about whether this is going to spread further to the whole region, which could impact very much on global economic growth,” she said. “We hope it will end because it does create this uncertainty. It’s another dark cloud on the horizon.”

The Geneva-based trade organisation last week cut in half its projection for growth in the world’s goods trade this year, citing ongoing inflation, higher interest rates, China’s weakening economy, and the conflict in Ukraine.

Compared to its projection from April of 1.7%, the WTO predicted that the volume of merchandise trade would only rise by 0.8% in 2023.

It predicted that the growth of the goods trade in 2024 would be 3.3%, which is essentially the same as its 3.2% projection from April.