The WTO has sharply upgraded its outlook for global merchandise trade despite the ongoing West Asia crisis, with goods trade volume now expected to grow 3.9 per cent in 2026, more than double its earlier forecast of 1.9 per cent in March.
In a potential boost for Indian exporters, Asia is projected to lead merchandise export growth in 2026 at 9.9 per cent, followed by North America at 5.7 per cent and Africa at 5.6 per cent, according to the WTO’s latest Global Trade Outlook and Statistics, released on Thursday.
The brighter prospects reflect supply chains proving more adaptable to geopolitical disruptions and a surge in AI-related investment driving trade in AI-enabling goods. However, the WTO downgraded its services trade forecast as the conflict weighed on transport and international travel.
Merchandise trade growth is projected to accelerate further to 4.1 per cent in 2027, while services trade growth is expected to slow to 3.3 per cent in 2026 from the earlier forecast of 4.8 per cent, before rebounding to 6.4 per cent in 2027.
“The numbers reflect trade resilience in action. When disruptions strike, an integrated world economy and a rules-based trading system provide economies flexibility to keep essential products flowing to businesses and households that need them,” WTO Director General Ngozi Okonjo-Iweala said.
The upgrade to the goods trade outlook follows stronger-than-expected performance in the first half of 2026, when merchandise trade volume grew 3.5 per cent despite disruptions to energy, fertilizer and transport markets, the report said.
Trade in AI-enabling goods rose 67 per cent year-on-year in the first half and accounted for 47 per cent of merchandise trade growth. But some countries have felt the shock more than others and not everyone can access emerging opportunities such as AI, Okonjo-Iweala cautioned. “It is essential to ensure that the rules-based trading system continues to absorb shocks and bridge gaps so that opportunities are open to all,” she said. Exports from West Asia are forecast to contract 17.2 per cent, while those from the Commonwealth of Independent States are projected to decline 3.9 per cent.
The stronger-than-expected merchandise trade growth reflects two opposing forces, the report said. On the one hand, AI-related investment has increased demand for AI-enabling goods, which accounted for 47 per cent of global merchandise trade growth in value terms in the first half of 2026.
On the other, reduced shipments of oil, natural gas and fertilizers have weighed on merchandise trade, but the former has outweighed the latter so far this year. Supply chains have adapted by sourcing from alternative suppliers and rerouting trade through different ports and corridors.
While high commodity prices may persist as bottlenecks constrain flows of fuels and fertilizers, continued AI investment and the broader digitisation of the global economy are expected to keep merchandise trade growth above world GDP growth in 2027, the report said. AI investment and the West Asia conflict are also affecting the services trade outlook, but in different ways. “AI is lifting trade in computer and financial services. However, the impact of the conflict in the Middle East is prevailing in traditional services such as transport, tourism and construction,” the report said.
Source: The Hindu Business Line
