NextFin news, The World Trade Organization (WTO) announced on Tuesday, October 7, 2025, a significant downward revision of its global merchandise trade volume growth forecast for 2026 to just 0.5 percent. This adjustment reflects the anticipated delayed impact of tariffs implemented by US President Donald Trump, which are expected to weigh heavily on trade flows in the coming year.
WTO Director-General Ngozi Okonjo-Iweala expressed concern over the bleak outlook for 2026 during a press briefing in Geneva, stating, "The outlook for next year is bleaker … I am very concerned." The revised forecast marks a sharp decline from the WTO's previous August estimate of 1.8 percent growth for 2026.
Conversely, the WTO upgraded its global trade growth forecast for 2025 to 2.4 percent, a substantial increase from the earlier projection of 0.9 percent. This upward revision is primarily attributed to accelerated imports into the United States ahead of scheduled tariff hikes and a surge in trade involving artificial intelligence (AI)-related products.
According to the WTO's October 7 "Global Trade Outlook and Statistics" update, the first half of 2025 saw world merchandise trade volume grow by 4.9 percent year-on-year, with trade value rising 6 percent compared to 2 percent growth in 2024. The surge was driven by exporters frontloading goods such as machinery, motor vehicles, and lumber into the US before tariff increases took effect, alongside a 20 percent year-on-year jump in shipments of AI-linked goods including semiconductors and telecommunications equipment. These AI-related products accounted for nearly half of the overall trade expansion.
Regionally, Asia and Africa recorded the strongest export volume growth in 2025, while Europe’s export growth slowed and North America experienced a decline. On the import side, African nations and Least Developed Countries saw the fastest growth, contrasting with contracting imports in North America.
The WTO report highlights that the cooling trade outlook for 2026 is mainly due to the higher tariffs imposed by the Trump administration in August 2025, which have begun to disrupt trade flows. WTO economists warned that rising input prices and a slowdown in trade shipments could lead to increased inflation in late 2025 as inventories shrink in sectors highly exposed to tariffs.
The maritime shipping sector, which benefited from the 2025 trade growth, is expected to face challenges ahead. Growth in maritime services is forecasted to slow from 6.8 percent in 2024 to 4.6 percent in 2025 and further to 4.4 percent in 2026. Transport services growth is projected to drop sharply from 4.5 percent in 2024 to 2.5 percent in 2025, and then to 1.8 percent in 2026, directly impacting shipping companies.
Despite these challenges, Okonjo-Iweala emphasized the resilience of the global trading system, noting that "trade resilience in 2025 is thanks in no small part to the stability provided by the rules-based multilateral trading system." She also called for nations to "reimagine trade" in response to current disruptions.
Looking ahead, the WTO identifies sustained growth in AI-related goods and services as a key potential driver to offset some of the negative effects from rising tariffs and trade restrictions over the medium term.
Overall, the WTO forecasts world merchandise trade volume growth to slow from 2.8 percent in 2024 to 2.4 percent in 2025, before dropping sharply to 0.5 percent in 2026. Global GDP growth is also expected to ease slightly from 2.7 percent in 2025 to 2.6 percent in 2026.
These findings underscore the significant influence of US trade policy on global commerce and highlight the challenges facing the international trading system in the near future.
Sources: World Trade Organization (WTO) Global Trade Outlook and Statistics, October 7, 2025; Financial Times; Business Today Malaysia; gCaptain.
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