WTO downgrades global trade growth forecast to 0.5% for 2026 from 1.8%

Therefore, WTO economists have raised the 2025 merchandise trade growth forecast to 2.4 per cent from 0.9 per cent in August.

However, the 2026 projection has been lowered to 0.5 per cent from 1.8 per cent.

In the October 7 update of ‘Global Trade Outlook and Statistics’, WTO economists note that trade growth will likely slow next year as the impact of the cooling global economy and new tariffs set in.

The volume of world merchandise trade, as measured by the average of exports and imports, grew by 4.9 per cent year on year (YoY) in H1 2025. The value of world merchandise trade in current US dollar terms was up by 6 per cent YoY during the period following a 2-per cent increase in 2024.

Trade growth drivers in the first half included the frontloading of imports in North America and favourable macroeconomic conditions like disinflation, supportive fiscal policies and strong growth in emerging markets.

Industry statistics show rising inventories, with inventories-to-sales ratios in North America increasing in H1 2025 across sectors.

AI-related goods-including semiconductors, servers, and telecommunications equipment-drove nearly half of the overall trade expansion in the first half of the year, rising 20 per cent YoY in value terms. Asia's export performance was strong in AI-related products, a WTO release said.

Higher tariff rates and elevated trade policy uncertainty are set to eventually unwind some of the effects of earlier frontloading.

Already, rising input prices and a slowdown in trade shipments suggest inflation could increase in late 2025 as inventories shrink in tariff-affected, highly-exposed sectors.

With higher tariffs taking effect in August, some of the impacts projected in the WTO’s April 2025 forecast are now likely to materialise later in the year and into 2026.

WTO economists highlight that the key downside risk to the forecast is the spread of trade-restrictive measures and policy uncertainty to more economies and sectors. On the upside, sustained growth in trade for AI-related goods and services could provide a medium-term boost to global trade.

Asia and Africa are expected to record the fastest export volume growth in 2025, with modest performances also anticipated from South and Central America the Caribbean and the Middle East, while Europe will likely see slower growth.

North America and the Commonwealth of Independent States (CIS) face declining exports. Least-developed countries (LDCs) are expected to show robust export gains but face weakening trends ahead.

On the import side, Africa and LDCs are set to experience the fastest growth, contrasting with a contraction in North America.

In 2026, only North America, Europe and CIS will post an improvement in export performance; all regions will record weaker import performance in 2026.

ALCHEMPro News Desk (DS)