World trade is set to slow in 2026 following stronger-than-expected growth in 2025 on the back of surging trade in products enabling artificial intelligence (AI).
But economists from the World Trade Organization (WTO) warn that the ongoing conflict in the Middle East could further reduce trade growth if energy prices remain elevated, noting that it would also put pressure on food supplies and services trade due to travel and transport disruptions.
Prospects could, however, still improve if the conflict ends quickly and the boom in AI spending continues.
The latest "Global Trade Outlook and Statistics" released on March 19 provides a baseline growth scenario excluding energy price shocks, forecasting that global merchandise trade growth will slow to 1.9% in 2026 from 4.6% in 2025 as trade is expected to normalise following a surge in AI-related products and the frontloading of imports to avoid new tariffs.
World merchandise trade volume is then projected to grow by 2.6% in 2027. Commercial services trade growth will ease to 4.8% in 2026 after this year's 5.3% rise, then accelerate again to 5.1% in 2027. Together, goods and services trade will grow 2.7% in 2026 compared with 4.7% in 2025. Global GDP growth is projected to moderate slightly from 2.9% in 2025 to 2.8% in both 2026 and 2027, according to the report.
However, a scenario where both crude oil and liquefied natural gas (LNG) prices remain elevated throughout 2026 would shave 0.3 percentage points off the GDP forecast for 2026 the report predicts; this would in turn slash 0.5 percentage points off the trade forecast for this year and up to 1.0 percentage points for regions dependent on energy imports. This would mean merchandise trade volumes would grow by just 1.4% in the high energy price scenario. Services trade would also grow at a slower rate of 4.1% in 2026.
WTO director-general Ngozi Okonjo-Iweala said: "The outlook reflects the resilience of global trade, buoyed by trade in high technology products and digitally delivered services, adaptations in supply chains and the avoidance of tit-for-tat retaliation on tariffs.
“However, this baseline forecast is under pressure from the conflict in the Middle East. Sustained increases in energy prices could increase risks for global trade, with potential spillovers for food security and cost pressures on consumers and businesses. Nevertheless, WTO members can help cushion the impact and ease the economic burden on people worldwide by maintaining predictable trade policies and strengthening supply chain resilience."
Beyond fuels, the Strait of Hormuz blockade has disrupted fertiliser supplies critical to global agriculture, with around one-third of the world's fertiliser exports normally passing through the waterway, says Okonjo-Iweala.
“Major agriculture producers like India, Thailand and Brazil depend on the Gulf for 40%, 70% and 35% of their urea imports respectively. Gulf states face a food security challenge as well, with import dependency averaging 75% for rice and exceeding 90% for corn, soybeans and vegetable oil – commodities that would face higher costs through alternative routes.”
WTO economists note that there is some upside potential if the conflict is short-lived and if AI-related spending remains strong throughout 2026 and into 2027, in which case merchandise trade growth could be boosted by 0.5 percentage points leading to growth as high as 2.4% this year and 2.7% next year.
“It is also possible that the upside and downside risks could both materialise, with energy prices remaining high and AI-enabling goods trade continuing to surge. In this case, merchandise trade growth in 2026 might track closer to the baseline scenario.”
The full report is available here.
