WTO Raises Global Trade Outlook as AI Demand Counters Middle East Instability
By Olivia Le Poidevin
WTO Upgrades Global Trade Forecast Amid Geopolitical Tensions
GENEVA, Oct 8 (Reuters) - The World Trade Organization upgraded its forecast for global merchandise trade growth on Thursday, saying demand for AI-related products had helped offset the impact of disruptions caused by the US-Israeli war with Iran.
Revised Trade Growth Projections
World merchandise trade volume growth was stronger than expected and is now projected to reach 3.9% in 2026, up from 1.9% in the WTO's baseline forecast issued in March.
It expects 4.1% growth in 2027, up from a previous forecast of 2.6%, and marginally below 2025 trade volume growth of 4.2%.
AI and Semiconductor Demand Drives Growth
A surge in spending on semiconductors and AI data centres provided a significant boost, with trade in those products jumping 67% from a year earlier, the report said.
Services Trade Outlook Dims
However, the Geneva-based trade watchdog downgraded its outlook for services trade to 3.3% in 2026, down from a previous baseline forecast of 4.8%, due to higher aviation fuel costs linked to the conflict in the Middle East.
Growth forecasts this year for transport and travel services, both of which rely heavily on the region, were also cut to 0.9% and 0.2%, respectively. Services trade growth is forecast to rebound to 6.4% in 2027.
Regional Economic Performance
World GDP is expected to grow by 2.6% in 2026, with the largest gains in Asia at 4.3%, followed by Africa and South America, while the Middle East is expected to see a sharp drop in output of 4%.
Risks to the Trade Outlook
The WTO report warned that several risks could still affect the forecast such as diminishing household purchasing power due to higher fuel and fertiliser costs linked to disruption of the Strait of Hormuz, a critical route for global energy supplies, and the Russian war in Ukraine, as well as any slowdown in AI investment.
AI Boosts Global Trade Resilience
AI-Related Goods Lead Merchandise Trade Growth
In its new report, WTO economists said merchandise trade had proved more resilient than anticipated despite disruptions as a surge in spending on semiconductors and AI data centres fuelled demand for imported goods.
In value terms, AI-enabling goods accounted for nearly half — 47% — of global merchandise trade growth in the first half of 2026, but remain highly geographically concentrated, the report said.
Widening Gap Between Trade Volume and Value
The report also noted one of the widest gaps in recent years between the growth in world merchandise trade volumes — at 3.5% year-on-year in the first half of 2026 — and the dollar value of trade, at 15%, reflecting higher prices for energy products and strong demand for AI-enabling goods.
Regional Trade Performance
Asia is set to lead merchandise trade growth in 2026, with imports rising 9.5% and exports 9.9%, while Africa is also expected to post strong growth, with imports up 8.9% and exports up 5.6%.
Import growth is forecast to remain subdued in North America at 1.4%, although exports are expected to increase 5.7%. By contrast, both imports and exports in the Middle East are projected to contract sharply, falling 15.4% and 17.2%, respectively.
Geopolitical Fragmentation and Trade Patterns
The WTO said signs of wider fragmentation between rival geopolitical trade blocs had eased, but decoupling between the US and China had accelerated and was now the main driver of divergence in global trade patterns.
US-China Trade Decoupling
US imports from China fell 29% in 2025, reducing China's share of total US imports to 9.3% from more than 20% before trade tensions between the world's two largest economies flared up in 2018, the report said.
(Reporting by Olivia Le Poidevin; Editing by Emelia Sithole-Matarise)
