Anti-Multilateral Trade Deals May Hit Growth, Exports: Govt. Economists
Economists in the Ministry of Finance warned in the Monthly Economic Review for September that bilateral and regional trade deals substituting the multilateral trading system could lead to greater trade diversion, higher trade costs, and increased uncertainty. Citing the WTO's World Trade Report 2026, they noted that in a geo-fragmented world organized around geopolitical blocks, global GDP could decline by 5.1% and global exports by 18.6% by 2050. The report emphasized that regional pacts work best when operating within the WTO framework rather than replacing it.
Key Points
- Ministry of Finance economists warned against bypassing multilateral trade systems for fragmented bilateral deals.
- Geo-fragmented trade scenarios could lead to a 5.1% drop in global GDP and an 18.6% drop in global exports by 2050.
- A 'Free Trade Agreement world' scenario would cause severe cuts in global GDP and exports.
- Regional pacts should complement the multilateral system rather than substitute it to ensure favorable market access.
Exam Facts
- WTO's World Trade Report 2026 projects global GDP to decline by 5.1% in a geo-fragmented scenario.
- Global exports are projected to decline by 18.6% relative to the baseline in 2050.
- An enhanced cooperation world scenario projects global GDP and export increases of 2.9% and 17.9% respectively.
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