The Updated Forecast
The World Trade Organization (WTO) has revised its global trade outlook, raising its 2025 merchandise trade growth forecast to 2.4 percent, up from 0.9 percent in August. At the same time, the organization cut its 2026 projection to just 0.5 percent, citing the delayed impact of tariffs and a cooling global economy. According to France24, the revision reflects stronger‑than‑expected trade in the first half of 2025, driven by demand for artificial intelligence‑related goods and a surge in imports ahead of tariff deadlines.
The WTO noted that AI‑related products, including semiconductors, servers, and telecommunications equipment, accounted for nearly half of the trade expansion in early 2025. This surge was amplified by companies in North America front‑loading imports to avoid higher tariffs later in the year. The combination of technology demand and tariff anticipation created a temporary boost to global trade volumes.
However, the organization cautioned that this momentum is unlikely to last. As tariffs take full effect in 2026, trade growth is expected to slow sharply. The WTO’s Director‑General, Ngozi Okonjo‑Iweala, emphasized that while 2025 looks resilient, policymakers should not assume that the trend will continue without addressing structural risks.
Drivers of 2025 Growth
The upward revision for 2025 reflects several key factors. First, AI‑related capital expenditures have accelerated, with companies investing in hardware and infrastructure to support machine learning and data processing. According to Shipping Telegraph, AI goods grew by 20 percent year‑on‑year in value terms, far outpacing their share of overall trade.
Second, importers in North America increased shipments of machinery, vehicles, and electronics ahead of tariff hikes. This front‑loading effect boosted trade volumes in the first half of the year, though it also raised inventories. The WTO noted that some of this stockpiling may weigh on demand in 2026, as companies work through existing supplies.
Third, emerging economies contributed to stronger trade flows. South‑South trade, particularly between Asia, Africa, and Latin America, expanded by 8 percent year‑on‑year, surpassing the global average. This diversification of trade partners helped offset weaker performance in Europe and North America.
Risks for 2026
While 2025 shows resilience, the WTO’s downgrade for 2026 highlights significant risks. The organization projects that global trade growth will slow to just 0.5 percent, down from a previous estimate of 1.8 percent. The main driver of this slowdown is the full impact of tariffs imposed by the United States and other major economies.
According to Empresa Exterior, tariffs are expected to raise input costs and reduce competitiveness, particularly in sectors such as machinery, vehicles, and consumer goods. Companies that rushed to import ahead of tariff deadlines in 2025 may cut back sharply in 2026, leading to weaker demand.
The WTO also warned of broader macroeconomic risks. Slowing global GDP growth, projected at 2.6 percent in 2026, could further dampen trade. Rising input prices and logistical challenges, including higher shipping costs, may add to the pressure.
Regional and Sectoral Trends
The WTO’s report highlighted regional differences in trade performance. Asia and Africa are expected to record the fastest export growth in 2025, supported by strong demand for technology goods and commodities. North America, by contrast, is projected to see weaker exports as tariffs and inventory adjustments weigh on performance.
Europe is also expected to underperform, with slower growth in both exports and imports. The WTO attributed this to weaker consumer demand and ongoing uncertainty around trade policy. Latin America and the Middle East are projected to see modest gains, though these regions remain vulnerable to commodity price fluctuations.
Sectorally, technology goods remain the standout performer. Semiconductors, servers, and telecommunications equipment are expected to continue driving trade growth in 2025. By 2026, however, the impact of tariffs and slower investment may reduce momentum, particularly in capital goods and durable consumer products.
Implications for Investors
For investors, the WTO’s forecast suggests a two‑speed outlook. In 2025, cyclical sectors tied to AI supply chains, such as semiconductors, industrial machinery, and logistics, are likely to benefit from strong demand. Companies with exposure to emerging markets may also see opportunities as South‑South trade expands.
By 2026, caution is warranted. Tariff effects are expected to weigh on trade‑sensitive sectors, including autos, consumer durables, and industrials. Investors may need to adjust portfolios to account for slower global trade growth, focusing on companies with pricing power, diversified supply chains, or exposure to domestic demand.
The WTO’s report also underscores the importance of monitoring policy developments. Trade restrictions and tariff policies remain a key source of uncertainty. For investors, staying informed about policy shifts will be critical to managing risk and identifying opportunities.
Policy Considerations
The WTO emphasized that the outlook depends heavily on policy choices. If countries maintain measured responses to tariffs and avoid escalating trade disputes, the impact on global trade could be contained. However, if trade restrictions spread to more sectors and economies, the slowdown in 2026 could be deeper than projected.
Ngozi Okonjo‑Iweala urged governments to strengthen multilateral cooperation and avoid protectionist measures. She noted that while AI‑related trade has provided a temporary boost, long‑term resilience requires a stable and rules‑based trading system.
For policymakers, the challenge is balancing domestic economic priorities with the need to maintain open trade. The WTO’s forecast serves as a reminder that short‑term gains from tariffs can lead to longer‑term costs for global growth.
Outlook Beyond 2026
While the WTO’s forecast ends with a sharp slowdown in 2026, the longer‑term outlook may depend on how quickly economies adapt to new trade conditions. If AI‑related investment continues to expand, it could provide a medium‑term boost to global trade. Similarly, if countries roll back tariffs or negotiate new trade agreements, growth could recover.
For now, the WTO’s message is clear: 2025 offers opportunities, but 2026 requires caution. Investors, businesses, and policymakers alike will need to prepare for a more challenging trade environment as tariff effects fully materialize.
