KATHMANDU: The World Trade Organization (WTO) has warned that global gross domestic product (GDP) could fall by up to 10 percent by 2050 if the global trade system is not modernized. The warning was released Tuesday in the organization’s ‘World Trade Report 2026: A Turning Point for the Global Trade System,’ which highlights that trade policy is facing its most serious challenges in decades.

The report reviews the achievements of the multilateral trading system over the past 80 years alongside current global challenges. WTO Director-General Ngozi Okonjo-Iweala noted that approximately 72 percent of global goods trade still operates under the WTO’s ‘most-favored-nation’ framework. She emphasized that while the global trade landscape has changed significantly, the core principle that cooperation benefits all economies remains relevant. She added that WTO member nations are actively discussing reforms, as maintaining the status quo is not a viable option.

According to WTO Chief Economist Robert Staiger, there could be a 10 percent gap in real global GDP between a scenario of strong multilateral cooperation and one of a weakened trade system. The report outlines three potential scenarios for the future of global trade. If a strong multilateral system is maintained, global GDP is projected to grow by 2.9 percent and exports by 17.9 percent by 2050 compared to baseline projections.

However, the report warns that if multilateral trade rules weaken and trade becomes based on geopolitical blocs, global GDP could fall by 5.1 percent and exports by 18.6 percent. In a scenario where multilateral cooperation is replaced by a network of fragmented free trade agreements, global GDP could decline by 6.9 percent and exports by 26.9 percent. The report concludes that over the last eight decades, the multilateral trading system has been instrumental in reducing trade barriers, expanding global trade by nearly 50 times, and building an integrated, rules-based global economy.