A cargo ship sits outside the harbor at the Elizabeth Marine Corps Terminal, seen from Bayonne, New Jersey, USA, on April 9, 2025.
Shannon Stapleton | Reuters
The World Trade Organization on Tuesday hiked its forecast for global trade growth in 2025, but warned that the outlook for 2026 had worsened.
In its latest Global Trade Outlook and Statistics report published on Tuesday, the WTO projected trade volume growth to reach 2.4% in 2025, a sharp jump from the trading body’s previous estimate of 0.9% in its August report.
However, the outlook for next year is not so rosy. The organization has cut its previous forecast of 1.8% trade volume growth next year to an inactive 0.5%.
“As the global economy cools, trade growth is expected to slow in 2026, with the full impact of higher tariffs finally being felt for a full year,” the WTO said.
Trade tariffs have become a dominant feature and headwind since US President Donald Trump shocked friends and foes with his wide-scale tariff regime in April.
The country has scrambled to reach a trade deal with the White House, but even allies like the UK have seen 10% tariffs remain on goods exported to the US.
front loading import
In the first half of 2025 (up 4.9% year-on-year), global trade volumes will increase sharply, with several factors contributing to the robust expansion.
These included the front-loading of imports into the United States in anticipation of higher trade tariffs, and favorable macroeconomic conditions with exodus, supportive fiscal policies and tight labor markets, which boosted real incomes and spending in major economies, the WTO said.
Strong growth in emerging markets and increased demand for artificial intelligence-related goods, such as semiconductors, servers and communications equipment, also fueled global trade growth, with AI-related spending spending driving nearly half of overall trade expansion in the first half of the year, rising 20% in terms of annualized value.
Global competition has intensified in the development of AI-related products.
The WTO noted that the United States will account for about one-fifth of AI-related trade growth in the first half of 2025. However, the bulk of the expansion came from Asia, which accounted for nearly two-thirds of global AI-related trade growth over the same period.
“Trade growth spanned digital value chains, from raw silicon and specialty gases to cloud platforms and the power equipment for AI applications,” the WTO said in the report, adding that “Asia’s export performance was strong in AI-related products, consistent with a global surge in investment in the sector.”
A key downside to the latest forecasts is the spread of trade control measures and policy uncertainty to more economies and sectors, Economists said. They said sustained growth in trade in AI-related goods and services could boost global trade in the medium term.
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 subject to tariffs, trade in services can be affected indirectly through links to goods trade and production.
sudden deceleration
Looking ahead, signs of weakening trade and manufacturing output were already observed in developed countries, according to the WTO.
Commenting on the organization’s latest outlook, Director-General Ngozi Okonjo-Iweala said it will “help facilitate countries’ responses to tariff changes, the growth potential of AI, and increased global growth, especially trade setbacks in 2025.”
“Trade resilience in 2025 will be more than just a fraction of the stability provided by a rules-based multilateral trading system. But complacency is not an option,” she added.
“Today’s disruption to the global trading system is a call to action for nations to rethink trade and come together to build a stronger foundation that delivers greater prosperity to people everywhere,” said Okonjo-Iweala.
