The global economy could lose as much as 10 percent of its real output by 2050 if countries allow geopolitical tensions, protectionism and competing trade blocs to weaken the multilateral trading system, the World Trade Organisation (WTO) has warned.
The warning comes as governments increasingly turn to industrial policy, strategic trade measures and bilateral agreements to manage geopolitical and economic risks, raising concerns about the long-term cost of a more fragmented global trading environment.
In its 2026 World Trade Report, titled “A Critical Juncture for the World Trading System”, the WTO said the choice facing governments was increasingly between renewing multilateral trade cooperation and accepting potentially significant losses in global economic output and trade.
Under a stronger multilateral framework, global GDP could be 2.9 percent higher and global exports 17.9 percent higher by 2050 than under the baseline trajectory, according to the report.
However, the gains could quickly disappear if countries move towards fragmented trading arrangements.
The WTO modelled a “geo-fragmented world” in which international trade cooperation is increasingly organised around geopolitical blocs. Under that scenario, global GDP could fall by 5.1 percent and exports by 18.6 percent by 2050.
A separate scenario in which multilateral cooperation is replaced by a network of free trade agreements produces an even larger contraction, with global GDP falling by 6.9 percent and exports declining by 26.9 percent.
Taken together, the WTO said the difference between stronger multilateral cooperation and erosion of the rules-based system represents an opportunity cost of roughly five to 10 percent of global real GDP, depending on how trade fragmentation develops.
Developing economies face bigger stakes
The potential impact is particularly significant for developing economies, which remain heavily dependent on access to international markets.
The WTO said least-developed countries currently account for less than one percent of global trade, leaving them especially exposed to higher tariffs, trade costs and barriers to market access.
Under a strengthened multilateral scenario, GDP in least-developed countries could rise by 7.7 percent by 2050, largely because of lower tariffs and other trade costs.
High-income economies would also benefit, with the report projecting an increase of about $1.7 trillion in GDP in 2023 dollars, driven particularly by lower costs in services trade.
WTO seeks new rules for changing economy
The WTO said strengthening the trading system would require more than preserving existing arrangements.
Its proposed direction includes expanded market-opening commitments, new multilateral rules covering digital trade and services, wider participation in the system and a calibrated approach to balancing trade openness with legitimate security concerns.
The organisation said the global trading environment had changed significantly since the multilateral system was established, requiring its rules to adapt to a more digital, multipolar and interconnected economy.
Ngozi Okonjo-Iweala, WTO director-general, said the existing system had delivered substantial economic benefits over the past eight decades and continued to underpin a large share of world trade.
“About 72 per cent of global merchandise trade still takes place under the WTO’s most-favoured-nation terms,” she said.
Okonjo-Iweala said the founding principle that economies gain more from cooperation than unilateral action remained relevant despite changes in the global trading landscape.
“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,” she said.
Global trade is entering a period of structural change as shifting economic power, state intervention, technological disruption and geopolitical tensions reshape the way countries and businesses trade.
The WTO said digitalisation, changing global value chains and environmental policies are transforming production and cross-border commerce, while governments are increasingly focused on domestic industrial capacity and supply-chain resilience.
The organisation warned that the pressures cannot be addressed by simply preserving the existing trade architecture. Instead, it said global trade rules must evolve to reflect a changing economy while protecting the openness, predictability and fairness on which international commerce depends.
