The cargo ship is located outside the port of the Elizabeth Marine Corps Terminal, seen from Bayonne, New Jersey, USA, on April 9, 2025.
Shannon Stapleton | Reuters
On Tuesday, the World Trade Organization hiked forecasts for 2025 global trade growth, but warned that the outlook for 2026 has deteriorated.
In its latest Global Trade Outlook and Statistics report released Tuesday, the WTO predicted that trade volume growth in 2025 would reach 2.4%, rising sharply from previous estimates of 0.9% in the trade body’s August report.
However, the outlook for next year is not particularly rosy. The organization is inactively reducing its previous forecast of 1.8% trade volume increase next year by 0.5%.
“As the global economy cools, trade growth is expected to slow down in 2026, and the full impact of higher tariffs will ultimately be felt for a year,” the WTO said.
Trade tariffs became a dominant feature and headwind as US President Donald Trump shocked his friends and enemies with his wide-scale tariff regime in April.
The country has scrambled to reach a trade deal with the White House, but even allies such as the UK have seen 10% tariffs remaining on goods exported to the US
Front Loading Import
Global trade volumes rose sharply in the first half of 2025 (4.9% year-on-year), with several factors contributing to robust expansion.
These included front-loading of imports into the US in anticipation of higher trade tariffs, and favorable macroeconomic conditions with escape, supportive fiscal policies and tough labor markets, which helped boost real income and expenditures for the major economies, the WTO said.
Strong growth and increased demand in emerging markets for AI-related products, including semiconductors, servers and telecommunications equipment, has also driven global trade growth, with AI-related spending driving nearly half of overall trade expansion in the early age, rising 20% year-on-year.
When it comes to the development of AI-related products, global competition has been heated with both the US and Asia trying to dominate the sector.
The WTO noted that the US accounted for about a fifth of AI-related trade growth in the first half of 2025. However, the majority of the expansion came from Asia, accounting for almost two-thirds of global AI-related trade growth during the same period.
The major economies are competing to develop the capabilities of artificial intelligence as both the US and China are trying to control the sector. The WTO noted that the US accounted for about a fifth of AI-related trade growth in the first half of 2025. However, the majority of the expansion came from Asia, accounting for almost two-thirds of globally related trade growth during the same period.
“Trade growth spanned the digital value chain, from raw silicon and special gas to powered by cloud platforms and AI applications,” WTO said in the report, “Asia’s export performance is strong in AI-related products, consistent with a global surge in investment in this sector.”
The key downside to the latest forecasts is the widespread uncertainty in trade control measures and policy for more economies and sectors, Economists said. They said sustainable growth in AI-related trade in goods and services could boost global trade in the medium term.
Global Services export growth is expected to slow down from 6.8% in 2024 to 4.6% in 2025 and 4.4% in 2026. Although tariffs are not directly subject to, trade in services is indirectly affected, it is related to the transaction and production of goods.
A sudden slowdown
According to the WTO, future views have already seen signs of weaker trade and manufacturing production volumes in developed countries.
Commenting on the organization’s latest outlook, Director Ngozi Okonjo-Iweala said, “The measured response to changes in the country’s tariffs, the potential for growth in AI, especially in emerging economies, will help ease trade receding in 2025.
“Trade resilience in 2025 is not just a small part of the stability offered by a rule-based multilateral trading system. But self-satisfaction is not an option,” she added.
“The disruption in today’s global trading system is a call for action for nations to rethink trade and together to lay a stronger foundation for people everywhere to bring greater prosperity,” Oconho Iwila said.
