Amid the ongoing Middle East conflict, that has caused a spike in global energy prices, along with a disruption in global transport (especially sea-borne trade), a World Trade Organization (WTO) report now states that the growth in flow of goods will slow down markedly to 1.9% in 2026, from 4.6% in 2025, with a possibility of further deceleration, if the ongoing Iran war stretches further.
“Last year (2025), a surge in artificial intelligence-related trade and goods front-loading to avoid a slew of US tariffs enabled a better-than-expected growth performance. While global trade remains resilient, buoyed by trade in AI-related products, the growth forecast is under pressure from the expanding US-Israeli war on Iran,” WTO Director-General Ngozi Okonjo-Iweala said.
“If crude oil and liquefied natural gas prices remain high throughout 2026 due to the conflict, global trade in goods could slow further to 1.4%,” WTO economists noted.
According to the global trade body, a prolonged blockade of the Strait of Hormuz by Iran, choking one-third of fertiliser urea imports, risks hitting major producers like India, Thailand, and Brazil, fuelling food security risks. Sustained high energy prices, on the other hand, could shave 0.5 percentage points off global merchandise growth, with Asian and European fuel-reliant importers hit hardest.
“Services trade also faces a 0.7-point drop from growth forecasts of 4.8% to 4.1% due to shipping and flight disruptions. Last year, services trade grew by 5.3%,” the report remarked.
In 2025, world merchandise trade grew at nearly double the forecast rate as a surge in demand for AI-related goods, such as chips and semiconductors, offset the impact of American tariffs and subsequent trade turmoil. Trade in AI-enabling goods accounted for 42% of global trade growth last year, despite representing only one-sixth of global trade. The ratio further increased by 21.9% year-on-year to USD 4.18 trillion.
“However, the ongoing strength of investment in the sector is a big question mark for 2026 and beyond,” WTO commented.
In 2026, the global trade body expects goods and services trade, along with global GDP, to grow at rates of around 2.7% and 2.8%, respectively, following growth rates of 4.7% and 2.9% in 2025.
“Asia will lead merchandise import growth in 2026, with imports up 3.3% and exports up 3.5%, followed by Africa with 3.2% imports, 1.2% exports. North America will stay flat at 0.3% imports. Some 72% of world trade is being conducted on a ‘Most-Favoured-Nation’ basis after falling from about 80% at the start of last year when United States President Donald Trump imposed higher import tariffs. MFN requires WTO members to treat others equally,” WTO concluded.