The World Trade Organisation’s (WTO) latest Global Trade Outlook and Statistics, 2025-26, signals growing turbulence in the world economy. Rising tariffs, increased trade policy uncertainty (TPU), and geopolitical shifts are expected to weigh heavily on trade and output over the next two years. The WTO’s revised forecasts indicate slower growth in merchandise trade and services, significant regional disparities, and emerging digital shifts.

This article presents a comprehensive analysis of the WTO’s projections for global trade in 2025-2026, using key data tables from the report. And, explores WTO’s projections for global trade in 2025 and 2026, focusing on the impacts of tariffs and trade policy uncertainty, regional trade performances, commercial services outlook, trends in least-developed countries (LDCs), and developments in digitally delivered services.

Global Trade Outlook: Revised Downward

At the beginning of 2025, WTO economists had expected a gradual expansion of global trade, underpinned by easing inflation and stable macroeconomic conditions. However, the trade outlook has since deteriorated markedly due to an escalation in tariffs and a surge in trade policy uncertainty (TPU).

As of April 14, 2025, new tariffs—including suspended “reciprocal tariffs” by the United States—have led to a revision of the merchandise trade volume forecast. The WTO now expects a contraction of -0.2% in global merchandise trade in 2025, followed by a modest recovery of 2.5% in 2026.

Without these policy shifts, merchandise trade could have grown by 2.7% in 2025 and 2.9% in 2026. In terms of GDP, world output at market exchange rates is projected to grow by 2.2% in 2025, 0.6 percentage points below the baseline, with a slight rebound to 2.4% in 2026.

Table 1: Merchandise Trade Volume and GDP Growth (% Change)

Uneven Regional Outlook: North America Weighs, Asia and Africa Show Resilience

The impact of recent trade measures is far from uniform across regions. According to the WTO’s adjusted forecast:

• North America is expected to subtract 1.7 percentage points from global merchandise trade growth in 2025, exerting the most significant drag on global performance.
• Asia, although still a net contributor, will see its positive contribution halve to 0.6 percentage points from a baseline of 1.2 points. Regional trade diversion driven by U.S.-China tensions is expected to boost Chinese exports to other regions, while U.S. imports from China, particularly in sectors like textiles and electronics, will decline.
• Europe remains a marginal positive contributor at 0.5 percentage points, down slightly from 0.6.
• Africa, the Commonwealth of Independent States (CIS), the Middle East, and South and Central America and the Caribbean continue to add to global trade growth, though at lower rates due to reduced demand from major economies.

Interestingly, had intra-EU trade remained robust, global merchandise trade could have grown by 4.3% in 2024, rather than 2.9%, highlighting how regional downturns in trade integration affect the broader global picture.

Table 2: Regional Contributions to Merchandise Trade Growth (2025)

Tariffs and Trade Policy Uncertainty: The Core Disruptors

The resurgence of tariff-based protectionism and a broader climate of TPU are the key forces undermining trade growth. Should the U.S. implement the currently suspended reciprocal tariffs, world merchandise trade would decline by an additional 0.6 percentage points. If TPU spreads more broadly beyond U.S.-linked trade relationships, the decline could deepen by a further 0.8 points. Combined, these factors could result in a 1.5% contraction in world trade in 2025.

The WTO’s analytical model reveals that such policy shifts not only depress trade volumes but also diminish business confidence, investment flows, and consumer spending. In effect, tariffs and TPU act as hidden trade costs that hinder macroeconomic recovery and impair long-term global value chains.

Commercial Services Trade: Cooling Momentum

For the first time, the WTO has issued forecasts for commercial services trade volumes. Although services are not directly impacted by tariffs, they are vulnerable to spillover effects from merchandise trade declines. The adjusted outlook shows:

• Global commercial services trade is projected to grow by 4.0% in 2025, down from a baseline of 5.1%.
• In 2026, services trade will rise slightly to 4.1%, still below baseline expectations.

Transport services, closely tied to goods trade, are particularly impacted. Their volume growth is expected to slow to just 0.5% in 2025, compared to 2.9% in the baseline. Travel services are forecast to grow by 2.6%, reflecting discretionary cutbacks amid economic uncertainty. Other commercial services, including professional and financial services, are projected to expand by 5.3%.

Table 3: Commercial Services Export Growth (% Change)

Digitally Delivered Services: A Resilient Frontier

Despite global trade headwinds, digitally delivered services continue to expand, underpinned by technological advancements, remote work, and global demand for digital content and IT services.

• Global exports of digitally delivered services reached US$ 4.64 trillion in 2024, growing by 8.3%.
• These services now represent 14.5% of world exports of goods and services, up from 12.2% in 2020.
• In 2024, Africa’s exports of digitally delivered services grew by 13%, while Asia and North America recorded a more modest 6% growth.

Sub-sectors like computer services and R&D are driving this surge. For instance, computer services reached US$ 1 trillion in 2024, reflecting rising global demand for AI-driven solutions and cybersecurity. Countries such as Ireland, Japan, Egypt, Peru, and Indonesia posted double-digit growth in this area, underscoring the decentralization of digital capabilities.

Table 4: Digitally Delivered Services – 2024 Highlights

LDCs: Trade Diversion Creates Unexpected Opportunities

Amid the gloom, the report highlights a potential opportunity for least-developed countries (LDCs). Many LDCs have export structures similar to China’s, especially in textiles and electronics. As Chinese goods face higher tariffs, LDCs could step in to fill the gap, particularly in the U.S. market.

• Export volume growth for LDCs is expected to rise to 4.8% in 2025 (up from a baseline of 3.5%).
• Import growth will also increase slightly to 7.6%, while GDP growth remains stable at 3.9%.

In value terms, LDC merchandise exports rose by 5% in 2024, reaching US$ 275 billion, while imports increased by 3% to US$ 349 billion. Their share of global exports has reached a record 1.12%, signalling growing participation in global trade, albeit from a small base.

Table 5: LDCs Trade Trends (US$ Billion)

Sectoral Performance: Mixed Signals

Product-level trade in 2024 revealed significant variability. While some sectors like office equipment rebounded, others like fuels continued to decline.

Table 6: Merchandise Trade by Product (US$ % Change, 2024)

Conclusion:

The WTO’s April 2025 report underscores a pivotal moment for global trade. While certain sectors—like digitally delivered services and LDC exports—present pockets of opportunity, the overall outlook is overshadowed by geopolitical tensions, policy uncertainty, and protectionism.

A recalibration toward cooperative trade practices, robust digital infrastructure, and support for emerging economies will be essential to reinvigorate global trade. Without such efforts, the recovery risks being shallow, regionally imbalanced, and vulnerable to further shocks.