WTO hikes global trade forecast for 2025; slowdown expected in 2026
A cargo ship sits outside the Elizabeth Marine Terminal, seen in Bayonne, New Jersey, USA, USA, April 9, 2025.
Shannon Stapleton | Reuters
The World Trade Organization on Tuesday forecast global trade growth in 2025 but warned that the 2026 outlook has worsened.
In its latest “Global Trade Outlook and Statistics” report released on Tuesday, the WTO predicted trade volume growth in 2025 will rise sharply from a previous forecast of 0.9% in the trade body’s August report.
However, the outlook for next year is not so rosy, with the organization downgrading its previous expectation of 1.8% trade volume growth to 0.5% next year.
“Trade growth is expected to slow in 2026 as the global economy cools and the full impact of higher tariffs is finally felt throughout the year,” the WTO said. he said.
Trade tariffs have become a dominant feature and headwind for global business since US President Donald Trump shocked friends and foes alike with his expansive tariffs regime in April.
Countries have struggled to reach trade deals with the White House, but even allies like the UK are left with a 10% tariff on goods exported to the US
Front-loading imports
Global trade volumes rose sharply in the first half of 2025—up 4.9% year-on-year—with several factors contributing to the robust expansion.
The WTO included favorable macroeconomic conditions, with frontloading and DISTISTING of imports to the United States in anticipation of higher trade tariffs, accommodative fiscal policies, and tight labor markets that increased real incomes and spending in major economies.
Strong growth in emerging markets and rising demand for AI-related goods—including semiconductors, servers and telecommunications equipment—fueled global trade growth, with AI-related spending accounting for almost half of total trade expansion in the first half of the year.
Global competition has heated up when it comes to the development of AI-related products, with both the US and Asia looking to dominate the industry.
The WTO noted that the United States accounted for approximately one-fifth of global AI-related trade growth in the first half of 2025. The bulk of the expansion came from Asia, which also accounts for nearly two-thirds of global AI-related trade growth.
Major economies are racing to develop AI capabilities, with both the US and China looking to dominate the sector. The WTO noted that the United States accounted for approximately one-fifth of global AI-related trade growth in the first half of 2025. However, the bulk of the expansion has come from Asia, which also accounts for nearly two-thirds of global AI-related trade growth.
“Trade growth has spanned the digital value chain, from raw silicon and specialty gases to cloud platforms and devices powering AI applications,” the WTO report said. he said.
A key downside risk to the latest forecast is the spread of trade restrictive measures and policy uncertainty to more economies and sectors, WTO economists said. At the top, they said continued growth in trade for AI-related goods and services could provide a medium-term boost to global trade.
Global Services export growth is expected to slow from 6.8% in 2024 to 4.6% in 2025 and 4.4% in 2026. Although not directly subject to tariffs, trade in services may be affected indirectly through linkages to trade and production of goods.
sharp deceleration
The WTO noted that signs of possible weakness in trade and manufacturing output and slower growth in employment and incomes have already been observed in developed economies.
Commenting on the organisation’s latest outlook, managing director Ngozi Okonjo-Iweala said “the measured response of countries to tariff changes overall, along with the growth potential of AI as well as increased trade between the rest of the world – particularly emerging economies – will help mitigate trade disruptions in 2025.”
“Trade flexibility in 2025 is due in no small part to the stability provided by the rules-based multilateral trading system. Complacency is not an option, though.” He added.
“Today’s disruptions to the global trading system are a call to action for nations to reimagine trade and together create a stronger foundation that delivers greater prosperity for people everywhere,” Okonjo-Iweala said. he said.
