Global goods trade growth is projected to slow sharply to 1.9% this year from 4.6% in 2025, and could weaken further if the Middle East conflict continues to push up energy prices and disrupt global supply chains, according to a World Trade Organization (WTO) report released on Thursday.
Last year’s stronger-than-expected performance was driven by a surge in demand for AI-related goods and a rush to ship products ahead of new U.S. tariffs. While trade remains relatively resilient—supported by AI-related demand—WTO Director-General Ngozi Okonjo-Iweala warned that the escalating U.S.-Israeli conflict involving Iran is putting pressure on the outlook.
WTO economists said that if crude oil and liquefied natural gas prices remain elevated through 2026 due to the conflict, global goods trade growth could slow further to 1.4%.
The report also warned that a potential Iranian blockade of the Strait of Hormuz could disrupt one-third of global urea fertilizer imports, affecting major agricultural producers such as India, Thailand, and Brazil, and raising food security concerns. Persistently high energy prices could shave 0.5 percentage points off global merchandise trade growth, with fuel-dependent importers in Asia and Europe most affected.
Services trade is also expected to slow, with growth projected to drop by 0.7 percentage points—from 4.8% to 4.1%—due to disruptions in shipping and air travel. This follows a 5.3% expansion in services trade last year.
AI trade outlook uncertain
In 2025, global merchandise trade grew at nearly double the forecast rate, largely due to strong demand for AI-related goods such as semiconductors and chips, which helped offset the impact of U.S. tariffs and trade tensions.
AI-related products accounted for 42% of global trade growth despite making up only about one-sixth of total trade. Their value rose 21.9% year-on-year to $4.18 trillion in 2025.
However, the report noted that continued investment in this sector remains uncertain heading into 2026 and beyond.
Overall, global trade and GDP are expected to grow at similar rates this year—2.7% and 2.8%, respectively—compared with 4.7% trade growth and 2.9% GDP growth in 2025.
Regionally, Asia is forecast to lead merchandise trade growth in 2026, with imports rising 3.3% and exports 3.5%, followed by Africa with 3.2% import growth and 1.2% export growth. North America’s import growth is expected to remain subdued at 0.3%.
The WTO also noted that around 72% of global trade is currently conducted under Most-Favoured-Nation (MFN) terms, down from about 80% at the start of last year after higher U.S. tariffs were introduced. The MFN principle requires equal trade treatment among WTO members.
Okonjo-Iweala said this trend serves as a reminder ahead of the WTO’s upcoming conference in Cameroon that, while the rules-based trading system is under strain, it remains resilient.
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