Global Trade to Slow to 1.9 Pc in 2026: WTO

Chennai: Global merchandise trade growth would slow to 1.9 per cent in 2026 from 4.6 per cent in 2025 and by 2.6% in 2027. Commercial services trade growth too will ease to 4.8 per cent in 2026 after this year's 5.3 per cent rise, then accelerate again to 5.1 per cent in 2027. However, if the Middle East crisis persists, merchandise trade volumes would grow by just 1.4 per cent in the high energy price scenario and services trade would also grow at a slower rate of 4.1 per cent in 2026, finds WTO.

As trade is expected to normalise following a surge in AI-related products and the frontloading of imports to avoid new tariffs, trade growth will taper in 2026. World merchandise trade volume is then projected to grow by 2.6 per cent in 2027. Commercial services trade growth will ease to 4.8% in 2026 after this year's 5.3% rise, then accelerate again to 5.1% in 2027. Together, goods and services trade will grow 2.7% in 2026 compared with 4.7% in 2025. Global GDP growth is projected to moderate slightly from 2.9 per cent in 2025 to 2.8 per cent in both 2026 and 2027.

However, if both crude oil and liquefied natural gas (LNG) prices remain elevated throughout 2026 would shave 0.3 percentage points off the GDP forecast for 2026. This would in turn slash 0.5 percentage points off the trade forecast for this year and up to 1.0 percentage point for regions dependent on energy imports. This would mean merchandise trade volumes would grow by just 1.4 per cent in the high energy price scenario. Services trade would also grow at a slower rate of 4.1 per cent in 2026

Beyond fuels, the Strait of Hormuz blockade has disrupted fertilizer supplies critical to global agriculture, with around one-third of the world's fertilizer exports normally passing through the waterway. Major agriculture producers like India, Thailand and Brazil depend on the Gulf for 40 per cent, 70 per cent and 35 per cent of their urea imports, respectively.

Gulf states face a food security challenge as well, with import dependency averaging 75 per cent for rice and exceeding 90 per cent for corn, soybeans and vegetable oil - commodities that would face higher costs through alternative routes.

WTO economists note there is also some upside potential if the conflict is short-lived and if AI-related spending remains strong throughout 2026 and into 2027, in which case merchandise trade growth could be boosted by 0.5 percentage points leading to growth as high as 2.4 per cent this year and 2.7 per cent next year.