WTO Raises 2025 Trade Growth Forecast Amid AI Boom and Strong South-South Trade

Global merchandise trade expanded faster than expected in the first half of 2025, according to the World Trade Organization’s (WTO) Global Trade Outlook and Statistics update released on 7 October. The stronger-than-anticipated performance—driven by rising demand for artificial intelligence (AI)-related products, pre-tariff import surges in North America, and robust South-South trade—has prompted WTO economists to raise their 2025 forecast for merchandise trade growth from 0.9% to 2.4%.

However, the outlook for 2026 has dimmed, with the WTO now projecting trade growth to slow sharply to 0.5%, reflecting the delayed impact of tariff hikes, inventory adjustments, and a cooling global economy.

At the same time, global services exports are expected to decelerate—from 6.8% in 2024 to 4.6% in 2025 and 4.4% in 2026—as transport and travel sectors lose post-pandemic momentum.

“Trade Resilience Shows the Value of Multilateralism”

WTO Director-General Ngozi Okonjo-Iweala praised the global trading system’s resilience despite continued geopolitical uncertainty and protectionist pressures.

“Countries' measured response to tariff changes, the growth potential of AI, and the increased trade among the rest of the world—especially emerging economies—helped ease trade setbacks in 2025,” said Okonjo-Iweala.

She noted that South-South trade—particularly among developing economies excluding China—has been a major driver of this resilience. South-South trade grew 8% year-on-year in value terms during the first half of 2025, compared with 6% for overall world trade, while trade between emerging economies excluding China rose around 9%.

“Trade resilience in 2025 is thanks in no small part to the stability provided by the rules-based multilateral trading system,” Okonjo-Iweala said. “Yet complacency is not an option. Today’s disruptions are a call to action for nations to reimagine trade and lay a stronger foundation for shared prosperity.”

Strong First Half Performance: AI and Pre-Tariff Imports Lead the Way

The volume of world merchandise trade—the average of exports and imports—rose 4.9% year-on-year in the first half of 2025. In value terms, trade grew 6%, following a modest 2% increase in 2024.

The report attributes this acceleration to several short-term factors, including:

• Frontloading of imports in North America ahead of anticipated tariff hikes.

• Favourable macroeconomic conditions, including disinflation, supportive fiscal policies, and strong growth in emerging markets.

• Rising inventories across key sectors such as machinery, motor vehicles, lumber, and construction equipment, as firms built buffers against supply chain uncertainty.

The WTO noted that AI-related goods—including semiconductors, servers, and telecommunications equipment—accounted for nearly half of total trade growth in early 2025, rising 20% year-on-year in value terms.

This boom reflects surging global investment in AI infrastructure, with Asia’s export performance standing out. Trade in raw materials and inputs for the AI value chain, such as silicon and specialty gases, has also surged, underscoring the sector’s deep integration across global supply networks.

2025–2026 Outlook: A Shift in Momentum

The WTO’s updated projections foresee trade momentum easing in 2026 as the effects of higher tariffs, costlier inputs, and cooling demand set in.

• World merchandise trade growth: 2.4% in 2025 → 0.5% in 2026.

• Global GDP growth: 2.7% in 2025 → 2.6% in 2026.

While the 2025 forecast has improved compared to April and August updates, the overall two-year outlook remains subdued. Economists attribute the downgrade for 2026 to the delayed impact of trade barriers and inventory corrections, particularly in durable goods.

“The tariff impact has shifted into 2026,” WTO analysts explained. “Inventory build-up in early 2025, especially for AI and manufacturing goods, will not be fully reversed next year.”

Key downside risks include the spread of trade-restrictive measures and heightened policy uncertainty, which could further dampen confidence. On the upside, sustained demand for AI-related goods and services could extend the current trade expansion beyond expectations.

Regional Outlook: Asia and Africa Lead

The WTO report projects Asia and Africa to record the strongest export growth in 2025, supported by industrial diversification, investment in technology, and regional trade integration.

Other highlights include:

• South and Central America, the Caribbean, and the Middle East are set for modest export growth.

• Europe will see slower growth amid weak manufacturing output and high energy costs.

• North America and the Commonwealth of Independent States (CIS) are projected to experience declining exports in 2025.

• Least Developed Countries (LDCs) will continue to post solid export gains, though they face rising debt and vulnerability to external shocks.

On the import side, Africa and LDCs will record the fastest growth, while North American imports are expected to contract after the pre-tariff surge.

By 2026, trade performance will flatten across most regions, with only North America, Europe, and CIS showing mild export improvements, while import activity weakens globally.

Commercial Services Trade: Growth Slows but Digital Services Shine

The outlook for world commercial services trade—covering transport, travel, and digitally delivered services—has also been revised downward in line with weaker goods trade projections.

• Services export growth is forecast to slow from 6.8% in 2024 to 4.6% in 2025, and 4.4% in 2026.

• Transport services will decelerate sharply from 4.5% in 2024 to 2.5% in 2025, reflecting reduced goods shipments.

• Travel services will ease from 11% in 2024 to 3.1% in 2025, following the post-pandemic rebound.

However, digitally delivered services—including cloud computing, digital marketing, and professional services—are expected to outperform, growing 6.1% in 2025 and 5.6% in 2026.

Regionally, Europe is set to post the fastest growth in services exports in 2025, followed by Asia, the Middle East, and the CIS. Africa and Latin America will expand more slowly. In 2026, Asia and Africa are projected to accelerate, while growth in Europe and the Middle East will cool.

Global Trade Data and Interactive Tools

The WTO’s Global Trade Outlook and Statistics report also includes an expanded analysis of trade imbalances, tariff impacts, and the limits of trade policy in addressing structural global economic challenges.

To improve transparency and accessibility, the WTO has launched a new interactive data portal providing monthly merchandise trade data for over 120 economies, covering more than 70 product categories and 200 trading partners from January 2018 to August 2025.

The full report and datasets are available via the WTO Statistics Portal and the Tariff and Trade Data platform, offering researchers and policymakers timely insights into the evolving global trade landscape.

The Big Picture: Trade Transformation in the AI Era

While trade growth remains modest by historical standards, the WTO’s analysis underscores that the structure of global trade is shifting rapidly. AI-related goods and services are emerging as key drivers of the next wave of globalization, while South-South partnerships are reshaping the balance of economic power.

As Director-General Okonjo-Iweala noted, global trade resilience in 2025 highlights both the strength of the multilateral system and the need for renewed global cooperation.

“The world cannot take open trade for granted,” she said. “It’s time to modernize global trade rules for the digital age—ensuring that innovation, inclusion, and sustainability go hand in hand.”