The World Trade Organization, in its latest report titled "Global Trade Outlook 2026: A Critical Juncture for the International Trade System," has explored the upcoming transformations in the global economy. This report outlines three potential paths and scenarios for the future of global trade.
Positive and Negative Scenarios for the Global Economy
In the first scenario, which is based on "strengthening multilateral mechanisms," it is predicted that by 2050, global GDP will increase by 2.9 percent compared to the current trajectory, and global exports will rise by 17.9 percent. If this trend continues, the World Trade Organization could gain new life, and international markets could open up more than ever before. Additionally, new regulations will emerge to organize trade in services and the digital economy.
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In this outlook, the scope of membership in the organization will also expand, and alongside these developments, efforts will be made to balance free trade with national security considerations. This convergence will be vital and transformative for less developed countries, which currently hold less than one percent of global trade. It is predicted that tariff control and reduced transaction costs could lead to a 7.7 percent growth in the GDP of these countries.
Challenges from Economic Divergence
The two other pessimistic scenarios examine the costs of the erosion of global economic ties. If the world moves towards "geopolitical fragmentation," global GDP will decrease by 5.1 percent, and exports will drop by 18.6 percent. The scenario of a "world of scattered free trade agreements" has a heavier consequence, where the multilateral system is replaced by a network of small and scattered agreements. According to estimates, under these conditions, global GDP will decline by 6.9 percent and exports by 26.9 percent.
Comparing these scenarios shows that the path of the global economy is of great importance. The gap between strengthening multilateral cooperation and moving towards divergence could cost 5 to 10 percent of the actual global GDP. This figure represents a heavy cost for undermining the shared rules of global trade.
Despite the challenges, the report also points out another aspect. A large part of today's challenges is a result of the achievements of this trade system. The multilateral trade framework has reduced tariff barriers over the past eight decades and increased global trade volume by about 50 times, leading to a more open and integrated economy.
However, the transformations that have helped grow the global economy have made coordination among countries more difficult today. Four main factors contribute to this situation: the changing balance of global economic power, the increasing role of governments in the economy, the changing nature of trade, and rising geopolitical tensions.
Ngozi Okonjo-Iweala, the Director-General of the World Trade Organization, emphasizes the importance of the multilateral system. She believes that this framework has contributed to the formation of a more integrated and resilient economy, and still about 72 percent of global goods trade is conducted based on the principle of "most-favored-nation."
Okonjo-Iweala also highlights the need for reforming the structure of the World Trade Organization, referring to the experiences of the past eight decades that demonstrate this institution's adaptation to new conditions. Reforms could open a new path for it.
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