WTO Forecasts Slowdown in Global Trade Growth for 2026 Amid Geopolitical Tensions

Kathmandu. The World Trade Organization (WTO) has indicated that global trade growth is expected to slow down in 2026 following better-than-expected performance in 2025. In its latest report, the organization warned that the ongoing conflict in West Asia could put further pressure on world trade.

According to the report, assuming no major shock to energy prices, merchandise trade growth is projected to fall to 1.9 percent in 2026 from 4.6 percent in 2025. This growth is then expected to rebound to 2.6 percent in 2027.

Service trade growth is projected to be limited to 4.8 percent in 2026, rising to 5.1 percent in 2027. Overall trade in goods and services is expected to grow by 2.7 percent in 2026, down from 4.7 percent in 2025.

Global economic growth is also projected to slow slightly, remaining at 2.8 percent in 2026 and 2027, down from 2.9 percent in 2025.

However, the report warns that these projections could worsen if the conflict in West Asia disrupts energy markets. The conflict has reportedly affected global shipping, caused a sharp rise in oil prices, and led to economic instability.

Gas and oil prices in Europe have risen sharply. Gas prices have more than doubled compared to before the conflict began, and crude oil prices have also increased significantly.

If energy prices remain high throughout 2026, merchandise trade growth could fall by 0.5 percentage points to 1.4 percent. Service trade is then projected to grow by only 4.1 percent. This could also reduce global economic growth by 0.3 percent.

The Director-General of the WTO stated that high-tech goods and digital services have provided some strength to trade. However, she warned that the continuous rise in energy prices and the conflict will increase cost pressures on consumers and businesses.

According to experts, the high trade growth in 2025 was mainly due to increased imports in anticipation of potential high tariffs in North America and rising demand for Artificial Intelligence-related goods. However, these factors are less likely to persist in 2026.

Asia is expected to lead trade growth in 2026, with both imports and exports projected to increase. Export growth will also remain strong in South America. However, growth is projected to be weaker in North America and Europe.

The report notes the ongoing disruption in shipping and services due to the West Asia conflict, warning that a prolonged crisis could increase transport costs and lead to shifts in trade routes.