Growth in world trade in goods will slow down markedly to 1.9 percent this year from 4.6 percent in 2025 and could decelerate even more if the Middle East war continues to push energy prices higher and disrupt global transport, a World Trade Organization report said on Thursday.
Last year a surge in artificial intelligence-related trade and goods front-loading to avoid a slew of U.S. tariffs enabled a better-than-expected growth performance.
While global trade remains resilient, buoyed by trade in AI-related products, the growth forecast is under pressure from the expanding U.S.-Israeli war on Iran, WTO Director-General Ngozi Okonjo-Iweala said.
If crude oil and liquefied natural gas prices remain high throughout 2026 due to the conflict, global trade in goods could slow further to 1.4 percent, WTO economists said.
A prolonged blockade of the Strait of Hormuz by Iran, choking one-third of fertilizer urea imports, risks hitting major producers like India, Thailand, Brazil, fuelling food security risks, the WTO report said.
Sustained high energy prices could shave 0.5 percentage points off global merchandise growth, with Asian and European fuel-reliant importers hit hardest.
Services trade also faces a 0.7-point drop from growth forecasts of 4.8 percent to 4.1 percent due to shipping and flights disruption, the report found. Last year services trade grew by 5.3 percent.
Last year, world merchandise trade grew at nearly double the forecast rate as a surge in demand for AI-related goods, such as chips and semiconductors, offset the impact of U.S. tariffs and subsequent trade turmoil, the report stated.
Trade in AI-enabling goods accounted for 42 percent of global trade growth in 2025, despite representing only one-sixth of global trade. It increased by 21.9 percent year-on-year to US$4.18 trillion (HK$32.6 trillion) in 2025, according to the report.
However, the ongoing strength of investment in the sector is "a big question mark for 2026 and beyond," the report said.
This year, goods and services trade and global GDP are forecast to grow at around the same rate - of 2.7 percent for trade and 2.8 percent for GDP - following last year's respective growth of 4.7 percent and 2.9 percent.
Asia will lead merchandise import growth in 2026 with imports up 3.3 percent and exports up 3.5 percent, followed by Africa with 3.2 percent imports, 1.2 percent exports, the WTO forecasts. North America will stay flat at 0.3 percent imports, the report estimates.
Some 72 percent of world trade is being conducted on a Most-Favoured-Nation basis after falling from about 80 percent at the start of last year when Trump imposed higher import tariffs, WTO economists estimate. MFN requires WTO members to treat others equally.
Okonjo-Iweala said this figure served as a lesson ahead of the WTO's conference in Cameroon next week where trade ministers will meet to discuss reforms to the global trade body, that the rules-based system "may be battered, but it is far from broken".
Reuters
