Middle East crisis clouds global trade outlook, as growth set to slow: WTO
The Geneva-based body stated that sustained increases in energy prices linked to the conflict could further reduce trade growth
22 March, 2026
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Global trade growth is expected to slow in 2026 after a stronger-than-anticipated expansion in 2025, with the ongoing crisis in the Middle East posing a significant downside risk through higher energy prices and supply chain disruptions, the World Trade Organization said on Wednesday.
In its latest Global Trade Outlook and Statistics report, the WTO said global merchandise trade growth is projected to ease to 1.9 per cent in 2026, down from 4.6 per cent in 2025, as a surge in demand for artificial intelligence (AI)-related goods fades, and trade flows normalise.
The Geneva-based body warned that sustained increases in energy prices linked to the conflict could further reduce trade growth, with goods trade potentially slowing to as little as 1.4 per cent under a high-energy-price scenario.
AI-led rebound fades
Trade growth in 2025 was driven by strong demand for AI-enabling products, which helped offset the impact of tariffs and policy uncertainty.
According to the WTO, trade in AI-related goods rose 21.9 per cent year-on-year to $4.18tn, accounting for 42 per cent of global trade growth despite representing a relatively small share of overall trade.
This surge, alongside front-loaded imports ahead of tariff increases, pushed global merchandise trade growth above earlier expectations in 2025.
However, economists say these temporary factors are unlikely to persist at the same scale.
Baseline outlook points to moderation
Under the WTO’s baseline scenario, which excludes major energy shocks, merchandise trade growth is forecast at 1.9 per cent in 2026, before picking up to 2.6 per cent in 2027.
Commercial services trade is also expected to moderate, growing 4.8 per cent in 2026 after 5.3 per cent in 2025, before accelerating to 5.1 per cent in 2027.
Combined goods and services trade is projected to grow 2.7 per cent in 2026, compared with 4.7 per cent in 2025, while global GDP growth is expected to edge down slightly from 2.9 per cent in 2025 to 2.8 per cent in 2026 and 2027.
WTO director-general Ngozi Okonjo-Iweala said the outlook reflects underlying resilience but is increasingly vulnerable to geopolitical shocks.
She cautioned that rising energy costs could increase pressure on consumers and businesses and pose risks to global food security.
Energy and supply chain risks
The WTO said elevated oil and gas prices could reduce global GDP growth by 0.3 percentage points and cut trade growth by 0.5 percentage points, with sharper impacts in energy-importing regions.
The conflict has disrupted critical trade routes, particularly through the Strait of Hormuz, a key artery for global energy and commodity flows.
Shipping and air transport disruptions have increased costs and added uncertainty for global supply chains.
The report also highlighted risks to fertiliser supplies passing through the Strait of Hormuz, which are critical to global agriculture. Disruptions could affect agricultural production and food prices globally.
Services trade is also under pressure, with transport and travel disruptions weighing on growth. In a high energy price scenario, services trade growth could slow to 4.1 per cent in 2026, down from the baseline projection.
Regional outlook and policy landscape
Regionally, Asia is expected to lead merchandise import growth in 2026 at 3.3 per cent, followed by Africa at 3.2 per cent and South America at 2.5 per cent, while growth in Europe and the Middle East is forecast to remain subdued.
On the export side, Asia and South America are projected to post the strongest gains at 3.5 per cent, while Middle East export growth is expected to slow sharply to 0.6 per cent.
The WTO added that despite policy shifts and tariff adjustments, the multilateral trading system remains largely intact, with 72 per cent of global trade still conducted under most-favoured-nation terms as of early 2026.
Upside potential remains
Despite the weaker outlook, the WTO said there is scope for stronger trade growth if the conflict in the Middle East eases and demand for AI-related goods remains robust.
In such a scenario, merchandise trade growth could be boosted by 0.5 percentage points, reaching as high as 2.4 per cent in 2026.
However, the WTO said these factors were unlikely to continue at the same pace.
Overall, the body said the trajectory for global trade will depend on geopolitical developments, energy market trends and the sustainability of technology-driven demand, urging policymakers to maintain predictable trade policies and strengthen supply chain resilience.
































