• The WTO has downgraded its 2026 global trade growth forecast to 0.5% from 1.8%.
• In contrast, the 2025 trade growth forecast has been raised to 2.4% from 0.9%, driven by AI-related goods and front-loaded imports.
• WTO Director-General Ngozi Okonjo-Iweala expressed concerns about the trade outlook, indicating resilience but warning against complacency.
• 42% of global trade growth is attributed to AI-related goods, significantly impacting merchandise trade.
• The economic uncertainties related to tariffs are poised to affect trade dynamics across regions.

The World Trade Organization (WTO) has sharply reduced its forecast for global merchandise trade volume growth for 2026 to 0.5%, a significant drop from its previous estimate of 1.8%. This adjustment is primarily attributed to the anticipated effects of tariffs implemented by U.S. President Donald Trump, which have created considerable uncertainty in the global economy, according to Reuters and Channel News Asia.

Conversely, the WTO has raised its forecast for global trade growth in 2025 to 2.4%, a notable increase from 0.9% earlier in August. This growth has been propelled by robust demand for AI-related goods and a surge in imports in the United States preceding tariff hikes. This optimistic outlook comes despite global merchandise trade volume expected to slow from 2.8% in 2024 to 2.4% in 2025 before dropping to 0.5% the following year, according to AA and Africa News.

WTO Director-General Ngozi Okonjo-Iweala conveyed her concerns about the deteriorating trade outlook, stating, "The outlook for next year is bleaker ... I am very concerned." However, she acknowledged that the world trading system is demonstrating resilience, thanks to the stability provided by a rules-based multilateral system, as stated by The Jakarta Post.

The report emphasizes that nearly 42% of global trade growth in the first half of 2025 came from AI-related products, such as semiconductors and telecommunications equipment, driving significant demand ahead of the tariff increases. The increased trade was bolstered by a measured response from many countries regarding the varying tariffs imposed during Trump's administration, according to Reuters, AA, and Africa News.