WTO Sees 2026 Trade Slowdown, Warns Middle East Conflict Could Cut Deeper

The World Trade Organization said Wednesday that global trade growth is set to slow sharply in 2026 after a stronger-than-expected 2025, with economists warning that a prolonged Middle East conflict could further depress merchandise and services trade by keeping energy prices high and disrupting transport, travel, and fertilizer flows. 

In its latest Global Trade Outlook and Statistics, the WTO forecast baseline merchandise trade volume growth of 1.9 percent in 2026, down from 4.6 percent in 2025, before a modest rebound to 2.6 percent in 2027. Commercial services trade growth is projected to ease to 4.8 percent in 2026 from 5.3 percent in 2025, then edge back up to 5.1 percent in 2027. Combined goods-and-services trade growth is projected at 2.7 percent in 2026, roughly in line with expected global GDP growth of 2.8 percent. 

The report says 2025 trade outperformed prior WTO expectations largely because surging demand for AI-enabling goods offset the drag from higher tariffs and trade-policy uncertainty. In value terms, trade in AI-enabling goods rose 21.9 percent to $4.18 trillion in 2025 from $3.43 trillion a year earlier, accounting for 42 percent of total global trade growth despite representing only about one-sixth of world trade. 

But the Secretariat said that outlook is now under pressure from the Middle East conflict, particularly if oil and liquefied natural gas prices remain elevated through 2026. Under that higher-energy-price scenario, global GDP growth would be reduced by 0.3 percentage points, while merchandise trade growth would fall by 0.5 points to 1.4 percent. Services trade growth would also slow, to 4.1 percent in 2026. 

“The outlook reflects the resilience of global trade, buoyed by trade in high technology products and digitally delivered services, adaptations in supply chains and the avoidance of tit-for-tat retaliation on tariffs,” Director-General Ngozi Okonjo-Iweala said. But she warned that sustained increases in energy prices could intensify risks for trade and spill over into food security and consumer costs. 

The report highlights the Strait of Hormuz as a central vulnerability. WTO economists said the conflict has sharply curtailed oil shipments through the Gulf and disrupted fertilizer trade, with roughly one-third of global fertilizer exports normally passing through the waterway. Brazil gets 35 percent of its urea imports from the Persian Gulf, India 40 percent, and Thailand 70 percent, the report said. Gulf states themselves also face food-security exposure because they rely heavily on imports of grains, soybeans, and vegetable oils. 

Services trade is also exposed. The WTO said the Middle East accounts for 7.4 percent of global transport-services exports and serves as a major hub linking Europe, Asia, and Africa. Traffic through the Strait of Hormuz has fallen from 138 commercial vessels per day to almost zero since the conflict began, while more than 40,000 flights were canceled between Feb. 28 and March 9, according to data cited in the report. 

Even so, the WTO identified a potential upside case. If the conflict proves short-lived and AI-related spending remains strong through 2026 and 2027, merchandise trade growth this year could rise to 2.4 percent instead of 1.9 percent. The report also says both forces could operate at once, with strong AI demand offsetting some of the damage from higher energy prices and leaving headline trade growth closer to the baseline. 

Regionally, Asia is expected to post the fastest merchandise import growth in 2026 under the baseline scenario, at 3.3 percent, followed by Africa at 3.2 percent and South America at 2.5 percent. On the export side, Asia and South America are both projected to grow 3.5 percent. Europe is expected to remain weak, with merchandise export growth of just 0.5 percent, while Middle East export growth slows to 0.6 percent. 

The WTO also included a special analytical chapter estimating that 72 percent of world trade was still conducted on a most-favored-nation basis as of the end of February 2026, despite tariff turbulence throughout 2025. The report said recent tariff actions have “largely represented adjustments in approach rather than fundamental shifts in policy.”