UNCTAD Global Trade Outlook 2026: Navigating Headwinds through Innovation and Resilience
SDG 8: Decent Work and Economic Growth | SDG 17: Partnerships for the Goals
Ministry of Commerce and Industry
The UNCTAD Global Trade Update (January 2026) signals a critical juncture for the world economy, with global growth projected to remain sluggish at 2.6% in both 2025 and 2026. This subdued growth environment is expected to moderate trade prospects and investment flows, forcing a volatile external environment for developing nations. Major economies are also losing momentum, with the United States projected to grow at 1.5% and China at 4.6% in 2026, which will further dampen export demand and tighten financial conditions globally.
Top Trends Redefining Global Trade in 2026
WTO Reform at a Crossroads: The 14th Ministerial Conference (MC14) in Cameroon will address systemic challenges, including the restoration of the Appellate Body and preserving Special and Differential Treatment (SDT) for industrialization.
Tariff Proliferation: Governments are increasingly using tariffs as strategic tools for domestic and geoeconomic objectives, leading to a rise in average global tariffs particularly in manufacturing.
Value Chain Reconfiguration: Geopolitical strains and AI advancements are driving firms to diversify suppliers and “near-shore” production closer to consumers to mitigate risks.
Servicification Surge: Global services exports are expanding at twice the pace of goods trade, with digitally deliverable services now accounting for 56% of the total.
South–South Trade Engine: Merchandise trade between developing countries has soared to an estimated $6.8 trillion, with 57% of developing country exports now staying within southern markets.
Environmental Integration: Sustainable trade initiatives, such as the fully operational EU Carbon Border Adjustment Mechanism (CBAM), are beginning to redefine global trade flows and market access.
Critical Mineral Volatility: Despite a sharp price correction from 2021 highs, supply risks persist due to intensified export controls and licensing regimes in resource-rich nations.
What is the ‘Servicification’ of trade and why is it significant for 2026? It is the trend where services increasingly underpin production across all sectors, now making up 71% of global intermediate inputs. In 2026, this is significant because digitalization has made services tradable at scale, allowing sectors like finance, logistics, and IT to drive growth faster than physical goods. However, this trend risks leaving some behind, as developed economies deliver 61% of their services digitally, compared to just 16% for least developed countries (LDCs).
Policy Relevance
As a global growth outlier, India’s strategy must navigate a protectionist turn where technical regulations and sanitary standards now affect two-thirds of world trade.
Strategic Impact for India:
Capitalizing on Servicification: As a digital leader, India is well-positioned to leverage the 7.1% annual growth in digitally deliverable services, but must monitor rising global trade restrictiveness in this sector.
Navigating Manufacturing Tariffs: With global tariffs rising sharply in textiles, apparel, and machinery, India must enhance its cost-competitiveness to protect its export share.
Leading South-South Trade: India can leverage the fact that South-South trade is outpacing North-bound trade to deepen regional value chains within Asia and beyond.
Securing Critical Minerals: To support its green transition, India must navigate the intensified competition and export quotas for minerals like cobalt and lithium.
Adapting to CBAM: The full operation of the EU Carbon Border Adjustment Mechanism in 2026 requires Indian exporters in steel and aluminum to urgently adopt low-carbon production standards.
Follow the full news here: Global Trade Update (January 2026): Top trends redefining global trade in 2026