WTO Cuts 2026 Trade Forecast, Ups 2025 Outlook Amid Tariff Shifts
The World Trade Organization (WTO) has issued a significant revision to its global trade outlook, sharply reducing the 2026 growth forecast for merchandise trade volume to just 0.5%, down from its earlier estimate of 1.8%. This cut reflects the delayed effects of recent US tariffs and broader signs of a cooling global economy. However, the outlook for 2025 has improved, with the WTO upgrading its forecast to 2.4%, up from just 0.9% in August. The rise is attributed to import front-loading in the US, AI-related goods trade, and strong emerging market performance.
American companies have been accelerating imports of critical goods—especially semiconductors, machinery, and electric vehicles—in anticipation of new tariffs. This has created a temporary boost in global trade volumes.
The expanding global trade in AI-related products—including chips, computing hardware, and data infrastructure—is another major driver. Nations investing in digital transformation are increasing demand for cross-border tech supply chains.
The WTO noted disinflation, fiscal stimulus, and resilient demand in emerging economies like India, Brazil, and Vietnam as contributing factors for the improved 2025 forecast.
The major concern heading into 2026 is the lagging impact of US-imposed tariffs on imported goods, especially from China, Europe, and developing countries. These trade barriers are expected to reduce,
Other headwinds include,
The WTO emphasized that the rules-based global trade system remains resilient, but urged governments to avoid unilateral trade restrictions.
While not directly mentioned in the WTO statement, India is well-positioned to benefit in 2025 due to,
However, the global slowdown projected for 2026 could affect India’s export markets, especially in sectors like textiles, electronics, and auto components.
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