The World Trade Organization (WTO) has significantly downgraded its global merchandise trade forecast for 2025, now predicting a 0.2% year-on-year decline, a sharp reversal from the previously projected 3% growth announced in October 2024.
According to a WTO report released this week, the downgrade is based on current foreign trade policies and tariff measures as of April 14. If trade tensions escalate further, global trade could contract by as much as 1.5% this year. However, the organization forecasts a moderate recovery of 2.5% in 2026.
Meanwhile, global trade in commercial services is expected to grow by 4%, though this is slower than earlier projections, indicating a broader slowdown across sectors.
WTO Director-General Ngozi Okonjo-Iweala expressed concern about the ongoing instability in international trade relations, especially amid persistent US-China tensions.
“The recent de-escalation of tariff tensions has temporarily eased the pressure on global trade. However, the ongoing uncertainty threatens to become a brake on global growth with serious negative consequences for the world’s most vulnerable economies,” she warned.
The updated forecast marks a reversal from 2024, when global merchandise trade grew by 2.9%, outpacing global GDP growth of 2.8%. It was the first time since 2017 (excluding the post-COVID rebound) that trade outpaced production.
Looking ahead, WTO economists now expect global GDP to grow by 2.2% in 2025, with a slight improvement to 2.4% in 2026. The impact of recent tariff measures is also expected to vary significantly by region.
Adding to the gloomy outlook, Fitch Ratings has revised its global GDP growth forecast downward by 0.4 percentage points, bringing it to under 2%—the lowest level since 2009, excluding the pandemic years.
In a related development, US President announced a 90-day pause on all “reciprocal” trade duties for international partners on April 9, excluding China, which remains subject to a 10% tariff.
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