GENEVA: The World Trade Organization sharply lowered its 2026 forecast for global merchandise trade volume growth to 0.5 per cent on Tuesday (Oct 7), citing expected delayed impacts from US President Donald Trump’s tariffs.
It marks a significant revision down from its previous estimate in August of 1.8 per cent growth.
“The outlook for next year is bleaker … I am very concerned,” Director-General Ngozi Okonjo-Iweala told reporters in Geneva.
WORLD TRADING SYSTEM SHOWING RESILIENCE
However, she said the world trading system is showing resilience, with the rules-based multilateral system providing some stability amid trade turmoil.
For 2025, the WTO upgraded its forecast for global trade volume growth to 2.4 per cent, from 0.9 per cent previously, driven primarily by the front-loading of imports into the United States ahead of tariff hikes and growth in the trade of AI-related goods. It is still below the 2.8 per cent growth seen in 2024.
Trump’s tariff decisions since he took office in January have shocked financial markets and sent a wave of uncertainty through the global economy.
On Aug 7, Trump imposed higher tariffs on imports from dozens of countries, leaving major trade partners like Switzerland, Brazil and India scrambling for a better deal, while the EU struck a deal that set duties at 15 per cent on most EU goods imported into the United States.
GROWTH IN 2025 BUT OUTLOOK GLOOMY FOR 2026
Overall, world merchandise trade volume growth is expected to slow from 2.8 per cent last year to 2.4 per cent this year and 0.5 per cent next year.
The WTO also forecasts global GDP growth to ease slightly from 2.7 per cent in 2025 to 2.6 per cent in 2026.
“Tariff measures are weighing on trade, even though front-loading and the suspension of many duty hikes between April and August have pushed their effects back into the latter part of this year, and especially into next year,” Okonjo-Iweala said.
In the first half of 2025, world merchandise trade volume, measured by the average of exports and imports, increased by 4.9 per cent year-on-year, with trade value rising 6 per cent compared to 2 per cent growth in 2024, according to the WTO report.
Consequently, WTO economists upgraded their trade growth forecast for this year to 2.4 per cent, above April’s prediction of a 0.2 per cent fall.
The rush of exporters to send goods, including machinery, motor vehicles, and lumber to the US before the tariff increases, alongside a surge in demand for AI-related products, contributed to this growth, the report found.
Trade in AI-linked goods such as semiconductors and telecommunications equipment accounted for nearly half of overall trade growth, rising 20 per cent year-on-year. Asia’s export performance was particularly strong, the report said.
Asia and Africa are expected to see the fastest export volume growth this year, while Europe’s export growth will slow, and North America’s is set to decline. All regions are projected to experience weaker import performance in 2026.
