The trajectory of global trade this year is being pulled between two significant opposing factors, according to an analysis from the WTO Blog. Extraordinary investment momentum in artificial intelligence is fueling demand for related goods and digital services, while simultaneously, conflict in the Middle East is elevating energy and transport costs, posing a substantial downside risk.

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The World Trade Organization Secretariat’s latest outlook report details that global merchandise trade volume increased significantly in 2025, nearly doubling prior expectations. This performance was powered substantially by an AI surge, with investment in data centers, processors, and semiconductor equipment driving nearly half of all trade growth that year, despite constituting a smaller portion of total trade. Asia was the primary contributor to global trade expansion, while North America also experienced robust import activity early in the year, partly attributed to import frontloading ahead of anticipated tariff changes.

Services trade continued a post-pandemic normalization process in 2025, with strong, steady growth in digitally delivered and other commercial services even as travel demand moderated.

Projected Slowdown and Key Uncertainties

The baseline projection indicates a deceleration in merchandise trade growth for the current year, followed by a modest recovery in 2027. Services trade is forecast to expand at a somewhat faster rate over the same period. Significant uncertainty surrounds these forecasts, hinging on two open questions: the durability of elevated oil prices linked to Middle East tensions and the continued strength of AI-related investment.

A sustained increase in energy and transport costs could reduce projected merchandise trade growth by a notable margin. Services trade, particularly transport and travel, would face an even larger potential impact, with growth in the Middle East region itself expected to contract due to flight cancellations, shipping disruptions, and higher insurance costs.

Conversely, if spending on AI-enabling goods maintains its early 2026 momentum and remains at 2025 levels, it could add to the baseline merchandise trade growth projection, potentially counteracting much of the drag from higher energy expenses.

Ongoing Structural Shifts

Beyond immediate cyclical factors, several structural changes are reshaping global commerce. AI-enabling goods have rapidly increased their share of world trade since 2023, with trade in these products seeing very high annual growth in 2025. While North America is currently the fastest-growing market for these goods, Asia retains its position as the global hub.

Pressures toward trade fragmentation intensified again last year after a period of stabilization, largely driven by further decoupling between the United States and China. Imports into the United States from China fell sharply in 2025, while China redirected export flows toward other regions, spurring import growth in numerous emerging markets.

Additionally, the share of global trade conducted under standard most-favored-nation tariff treatment has declined recently, reflecting a rise in both tariff actions and preferential agreements. Despite this shift, the majority of world merchandise trade still occurs under MFN terms.

The central issues for global trade this year remain whether the AI investment boom will persist, how long the energy market shock will last, and if fragmentation pressures will deepen or stabilize. The WTO has indicated it will continue monitoring the implications of these developments for international supply chains and the broader economy.

Source: IndexBox Market Intelligence Platform