Global Services Trade Slows Sharply in Early 2025 Amid Currency and Market Shifts

Global trade in commercial services decelerated significantly in the first quarter of 2025, growing by only 5% year-on-year, a marked slowdown from the robust growth rates of around 10% recorded during the same periods in both 2023 and 2024, according to the latest joint estimates by the World Trade Organization (WTO) and UNCTAD.

The primary drivers behind the weaker performance include the appreciation of the US dollar—which reduced the value of exports in other currencies when measured in dollars—and growing economic uncertainty, which dampened global investment and demand for a range of digitally delivered and professional services.

Europe and North America Lag While Asia Continues to Expand

The regional breakdown of trade flows shows diverging trajectories. While Asia maintained momentum with a 9% increase in services exports, Europe and North America recorded only 3% growth each—less than half their performance from the previous year.

The European Union’s performance, when adjusted for currency fluctuations, was stronger in local terms. But when measured in US dollars, exports stagnated or declined. This reflects both exchange rate movements and a broader softening in key service sectors.

‘Other Commercial Services’ See the Sharpest Deceleration

The slowdown was most pronounced in “Other commercial services”, a broad category that includes professional, technical, financial, intellectual property, and research services—many of which are digitally delivered. These services typically account for around 60% of global services trade, with Europe alone contributing 40% of those exports in 2024.

Chart 1 illustrates the year-on-year decline in growth across this category, while Chart 3 shows that most of its subsectors underperformed in early 2025.

Key Sector Highlights:

Other Business Services

• US exports grew by only 4%, down from 8% in Q1 2024.

• EU exports were flat in USD terms, but grew 4% in euro terms, showing currency effects.

Financial Services

• Global growth was just 3%, hit by reduced investment activity and exchange rate shifts.

• US and EU exports each rose by only 2%, while Switzerland’s fell by 3%.

• UK exports bucked the trend with a strong 10% increase, fueled by 13% growth in exports to the US.

Intellectual Property (IP) Services

• Global growth slowed to 4%, from 7% the previous year.

• The US and EU continue to dominate, representing nearly 70% of global IP service exports in 2024.

• EU exports grew 3% in dollar terms, but 6% in euro terms, again highlighting currency distortion.

Construction Services

• One of the weakest performers, global construction exports plunged by 15%, erasing much of the 25% growth seen in Q1 2024.

• China’s exports, representing over 28% of global construction trade in 2024, declined by 25%, while the Republic of Korea fell 15% and the EU by 6%.

Computer Services

• This subsector remained resilient, driven by demand for AI, cybersecurity, and digital transformation tools.

• India’s exports grew 13%, while Ireland’s rose 9%, underscoring the persistent global appetite for tech services despite overall headwinds.

Transport and Travel: Mixed Signals Across Regions

Transport Services

• Global exports rose 3%, supported by frontloading activity in late 2024.

• Asia led growth at 10%, with China alone rising by 31%.

• South and Central America and the Caribbean saw shipping service payments jump 19%, indicating strong goods demand.

International Travel

• Expanded 5% year-on-year, marking the first time post-pandemic that global tourist arrivals exceeded 2019 levels by 3%, per UN Tourism data.

• In Asia, travel receipts surged 13%, led by China (+96%), Viet Nam (+33%), Japan (+25%), and Thailand (+18%).

• North America, in contrast, saw a 1% decline in travel receipts.

January–May 2025 Performance: Country-Level Trends

Early data from national sources for the first five months of 2025 offers further insights into individual country performance (Chart 4):

• China (+13%), India (+12%), and Japan (+11%) led growth among major exporters.

• The United States saw modest 5% export growth, while Canada’s exports fell by 6%.

• The EU posted 3% export growth to non-EU countries, but import growth outpaced exports at 6%.

• The United Kingdom experienced a robust services trade rebound, with exports up 9% and imports up 13%.

Outlook: Lingering Risks and Sectoral Divergence

Although some services—particularly in tech and tourism—continue to show resilience, the overall global services trade landscape has been reshaped by currency fluctuations, macroeconomic uncertainty, and slowing demand in key sectors like construction and financial services.

With central banks maintaining cautious stances amid inflation concerns, and investment activity remaining uneven, further volatility in services trade is likely in the months ahead. However, digitally deliverable services such as AI-driven solutions and remote business functions are expected to anchor future growth, especially across Asia’s rapidly expanding economies.

Revisions to quarterly data are expected as more information becomes available. Full datasets and visualizations can be accessed at the WTO’s Global Services Trade Data Hub and the World Trade Statistics 2024 portal.