GENEVA — The World Trade Organization has warned that the erosion of multilateral trade rules could leave the global economy significantly poorer, with global GDP potentially 5 to 10 percent lower by 2050 compared with a strengthened system of cooperation.
The warning was issued Tuesday as the WTO released its flagship World Trade Report 2026: A Critical Juncture for the World Trading System, which examines the achievements of the global trading system over the past eight decades and the mounting pressures threatening its future.
The report comes as trade policy faces what the WTO describes as its most serious and sustained disruption since the multilateral system was established 80 years ago.
WTO Calls for Urgent Reform
WTO Director-General Ngozi Okonjo-Iweala said the multilateral trading system had delivered major benefits by helping create a more integrated and resilient global economy.
About 72 percent of global merchandise trade continues to take place under the WTO’s most-favoured-nation terms, highlighting the continuing importance of the organisation’s rules to international commerce.
“The global trading landscape has changed significantly but the founding logic of the system, that all economies are better off cooperating rather than acting unilaterally, remains as relevant today as ever,” Okonjo-Iweala said.
She said WTO members were actively discussing reforms and recognised that the status quo could not be sustained indefinitely.
Three Possible Futures for Global Trade
The report models three potential paths for the global trading system.
Under an enhanced cooperation scenario, in which multilateral trade cooperation is strengthened, global GDP could increase by 2.9 percent and exports by 17.9 percent by 2050 compared with the baseline trajectory.
The outlook changes sharply if cooperation deteriorates.
In a geo-fragmented world, where trade relations are organised around geopolitical blocs, global GDP could decline by 5.1 percent and exports by 18.6 percent.
Under an FTA world, where multilateral cooperation is replaced by a network of free trade agreements and the WTO no longer plays its current role, global GDP could fall by 6.9 percent, while exports could decline by 26.9 percent.
Cost of Inaction Could Reach 10 Percent
WTO Chief Economist Robert Staiger said the difference between stronger multilateral cooperation and erosion of the system could amount to as much as 10 percent of baseline global real GDP.
“If the status quo is unsustainable, as many members believe, this illustrates the potential cost of inaction on reform,” Staiger said.
The WTO’s own summary says the erosion of WTO-based cooperation could reduce global GDP by 5 to 10 percent by 2050, while deeper multilateral cooperation could instead raise global GDP by 2.9 percent.
Global Trade Has Expanded Nearly 50-Fold
The report argues that the multilateral trading system has played a central role in reducing trade barriers and expanding international commerce since its foundations were laid after World War II.
Over the past eight decades, global trade has expanded by almost 50 times, while the system has grown from the original General Agreement on Tariffs and Trade framework involving 23 economies to a WTO with 166 members, accounting for about 98 percent of global trade.
The WTO says its rules have also helped make trade more predictable and constrained the escalation of trade disputes and protectionist measures.
However, the benefits have not been shared equally. Least-developed countries still account for less than 1 percent of world trade, while some workers, businesses and regions in developed economies have also experienced uneven gains from trade liberalisation.
Geopolitics, AI and Climate Add New Pressures
The report identifies several developments putting pressure on the existing system, including shifts in global economic power, increased government intervention, geopolitical tensions and changes in the nature of trade.
The rapid growth of global value chains, digital commerce and artificial intelligence is also creating new cross-border challenges that were not contemplated when many existing trade rules were negotiated.
The WTO says AI could significantly increase global trade and productivity, but argues that new rules and cooperation will be needed to manage emerging issues around technology, regulation and digital trade.
Geopolitical tensions have further complicated the picture, with governments increasingly citing national security, supply-chain resilience and technological competition when imposing trade restrictions.
Developing Economies Face Greater Risks
The WTO warned that the costs of fragmented trade would not be evenly distributed.
Smaller and poorer economies could be particularly vulnerable in a system dominated by discriminatory trade agreements and unilateral measures. The organisation says developing economies could lose substantially more than high-income economies under a fragmented trading environment.
For least-developed countries, the WTO estimates that replacing multilateral cooperation with a network of free trade agreements could result in a 16.5 percent reduction in GDP, compared with much smaller projected losses for high-income economies.
WTO Says Reform Is the Way Forward
The organisation says preserving the WTO does not mean preserving the status quo. Instead, members must update rules that have become outdated while maintaining the principles of reciprocity, non-discrimination and rules-based cooperation.
“The world economy that the WTO helped to create does not weaken the case for rules-based cooperation; it makes renewal of that cooperation more urgent,” the report concludes.
