WTO warns: global GDP may fall 10% by 2050 without reforms

Full text

GENEVA, Switzerland — Failure to reform the World Trade Organization could shrink the global economy by about 10% by 2050, a new report from the international body said Tuesday.

The alert comes as the WTO struggles to reform itself in a period of heightened global pressure in geopolitics and industrial policy, plus U.S. tariffs.

The WTO’s annual trade report compares three alternative futures for trade cooperation: enhanced cooperation, geopolitical fragmentation, and a world where the WTO is replaced by a network of bilateral and regional free trade deals.

Under enhanced cooperation, global GDP would be 2.9% higher by 2050, while exports would increase by roughly 18%.

Under geopolitical fragmentation, GDP would drop by 5.1% and exports would also fall 19%.

The worst outcome would be a world dominated by bilateral and regional FTAs, where the WTO’s role would be sidelined. Global GDP would drop by 6.9%, and exports would also fall by 27%.

Taken together, the figures represent a gap of roughly 10% of global GDP between the enhanced cooperation and FTA scenarios.

Worst disruption in 80 years

The report states that the current trading system is facing its worst disruption in 80 years.

WTO Chief Economist Robert Staiger said the organization was dealing with an economy that was increasingly different from the one its rules were designed to govern.

While 72% of global goods trade still takes place under the WTO’s most-favored-nation tariff terms, according to the report, that number stood at 80% two years ago, signaling a system under strain.

“The WTO remains an important force shaping world trade, but the economy it governs is now far more integrated, digital, multipolar, and complex than the one its rules were designed for, and the stakes of reform are high,” he said.

According to the report, there are four structural developments putting pressure on the global trading system: the changing distribution of economic power, the growing role of state intervention, the changing nature of trade — and geopolitics.

Governments are increasingly viewing trade through the lens of national and economic security, supply-chain concentration, access to critical technologies, resilience and dependence on geopolitical rivals, Staiger said.

The Geneva-based forum has been tested, particularly during the Trump administration, as U.S. President Donald Trump’s tariff regime shreds the global trade rulebook and openly flouts WTO rules.

Digital dilemma

The weakening of the organization comes as members struggle to reform it.

WTO members failed to agree on a plan to reform the organization at the ministerial conference in Cameroon in March. The U.S. tied efforts to agree on a work plan to an extension of a global ban on digital tariffs known as the e-commerce moratorium.

Washington sought a 10-year commitment, but Brazil threw a last-minute spanner in the works and vetoed efforts to extend the moratorium altogether. Nonetheless, a coalition of roughly 60 members pushed a plurilateral e-commerce agreement into force through their domestic legislation.

The dispute reflects one of the wider challenges facing the WTO — an increasing share of global commerce is taking place in areas where its rules have struggled to keep pace.

According to the report, digitally delivered services now represent 55% of global services exports, growing by 10% in 2025 alone.

“A growing share of the policies shaping trade now operate behind the border,” said Staiger, pointing to the growing role of services, digitalization and artificial intelligence.

“Privacy, cybersecurity, and consumer protection rules all serve legitimate goals,” he said. “But when national approaches diverge, they can fragment markets, forcing firms to duplicate compliance, localize data, or navigate incompatible rules across jurisdictions, in ways that the WTO framework was not designed to manage.”

Those challenges are increasingly testing a WTO framework that was built for a different global economy.

In the report’s foreword, WTO Director-General Ngozi Okonjo-Iweala says that disruptions reflect “a widespread sense that WTO rules have not kept pace with a rapidly changing global economy.”

Yet the mood in Geneva remains relatively optimistic.

“On the morale, I would say it’s quite good — not optimistic nor pessimistic,” one WTO diplomat told POLITICO. “Everyone is waiting to get down to business on reform. Quite a few concrete proposals are on the table — hence the slightly positive tone.”