WTO says outlook for goods trade is clouding amid mounting risks

Global goods trade in 2025 will grow less than initially forecast, the World Trade Organisation said, as rising instability weighs on economic activity and threatens to disrupt shipping.
The volume of total merchandise trade will rise by 3% next year, less than the 3.3% growth seen five months ago. The expansion for this year has been revised slightly up to 2.7%. The forecasts are in line with the WTO’s prediction that global gross domestic product will expand by 2.7% in both years.
Russia’s war in Ukraine and Israel’s stepped-up fighting in Gaza and Lebanon threaten to further destabilise a global economy where many central banks, having brought inflation down, have started cutting interest rates to avoid deeper slowdowns.
“Risks to the forecast are firmly on the downside due to regional conflicts, geopolitical tensions and policy uncertainty,” according to the report released on Thursday by the Geneva-based organisation. “An escalation of the conflict in the Middle East could further disrupt shipping and raise energy prices given the region’s importance in petroleum production.”
That language reflects a worsening assessment of the outlook for international commerce. In April, the WTO had said that “risks to the forecast are on the downside.”
Among the other threats to the forecast is a “fragmentation of supply chains linked to geopolitical considerations.” Still there is “some limited upside potential if interest rate cuts in advanced economies have a larger-than-expected positive impact on growth without reigniting inflation,” the WTO said.
The report highlighted different speeds of trade growth depending on the sector and geographic location.
During the first half of 2024, the value of world merchandise trade gained only 0.1%, the WTO said, while trade in commercial services from January through March – the most recent quarter for which data are available – jumped 8% from a year earlier. Preliminary figures suggest “that relatively strong growth is likely to be sustained in the second quarter as well.” Fuelling the growth in services trade is a digital transformation that “has dramatically increased the potential of some services to be traded across borders,” the WTO said. Digitally delivered services amounted to more than 54% of total services exports, and almost 14% of all exports of goods and services in 2023, it said.
Regional disparities exist, too, with “the most conspicuous weak points in the global economy” being Germany and Argentina, the WTO said. Purchasing manager surveys in other countries including the US “have also signalled weakness in manufacturing, whereas service sectors appear to be holding up better.”