WTO Raises 2025 Trade Forecast to 2.4% Amid AI Boom, Cuts 2026 Outlook Due to Tariffs
SDG 8: Decent Work and Economic Growth | SDG 17: Partnerships for the Goals
Institutions: Ministry of Commerce and Industry | Ministry of Electronics and Information Technology | Reserve Bank of India (RBI)
The World Trade Organization (WTO), in its October 2025 update of the Global Trade Outlook and Statistics, sharply revised its global merchandise trade growth forecast for 2025 upwards to 2.4% from a previous estimate of 0.9%. This unexpected strength in the first half of the year was driven primarily by a surge in demand for Artificial Intelligence-related goods, such as semiconductors, servers, and telecommunications equipment, which accounted for nearly half of the overall trade expansion. Additionally, strong growth in South-South trade, expanding by 8% year-on-year, and North American importers front-loading orders ahead of anticipated tariff hikes, contributed significantly to the momentum.
The outlook for 2026, however, was dramatically lowered to a sluggish 0.5% growth from the earlier projection of 1.8%. This severe downgrade reflects the delayed but expected drag from the cooling global economy and increasing trade policy uncertainty, with the full impact of US-imposed tariffs now anticipated to materialize next year as accumulated inventories are depleted globally.
The sharp slowdown projected for 2026 underscores the need for proactive domestic policy measures to sustain export competitiveness, particularly as Asia is forecast to record strong export growth in 2025. The increasing dominance of AI-related products in global trade flows signals an imperative for India to strategically boost its digital and high-tech manufacturing base to capture this high-growth sector.
Follow the full report here: https://www.wto.org/english/news_e/news25_e/stat_07oct25_e.pdf https://www.wto.org/english/news_e/news25_e/stat_07oct25_e.htm