Global trade is navigating a phase of competing forces, where strong growth driven by artificial intelligence (AI)-related goods is offsetting rising geopolitical risks, according to the latest assessment by the World Trade Organization (WTO).
The WTO’s Global Trade Outlook and Statistics highlights that global merchandise trade expanded by 4.6% in 2025, exceeding earlier expectations. This resilience was largely fueled by a surge in AI-enabling goods including semiconductors, chips, and data transmission equipment which recorded a 21.9% increase in value to $4.18 trillion, accounting for 42% of total global trade growth, despite representing only about one-sixth of overall trade.
This technology-driven expansion has played a critical role in stabilizing global trade amid policy uncertainty. Many of these high-tech products remained largely exempt from new tariff measures, while the suspension of certain tariffs and limited retaliatory actions further reduced disruptions. As a result, global trade flows remained robust despite underlying tensions.
Looking ahead, the WTO projects a moderation in 2026. Merchandise trade growth is expected to slow to 1.9%, while services trade growth will ease to 4.8% from 5.3% in 2025. Combined goods and services trade is forecast at 2.7%, down from 4.7% last year, with global GDP growth stabilizing at 2.8%.
Despite this slowdown, the multilateral trading system remains structurally stable. Approximately 72% of global trade continues under most-favoured-nation (MFN) terms, reinforcing the importance of predictable and non-discriminatory trade rules in sustaining international commerce.
However, geopolitical risks particularly stemming from the Middle East pose significant uncertainties. Disruptions to energy markets and key trade routes such as the Strait of Hormuz could increase costs and impact supply chains. These risks are especially pronounced for energy-importing regions and sectors reliant on global logistics networks.
At the same time, WTO economists identify clear upside potential. If the Middle East conflict proves short-lived and AI-related demand remains strong, merchandise trade growth could be boosted by 0.5 percentage points, reaching up to 2.4% in 2026 and 2.7% in 2027. Even under a mixed scenario where high energy prices persist but AI trade continues to expand growth could remain close to baseline projections.
Regional trends further illustrate this divergence. Asia is expected to lead global trade growth, with imports projected to grow by 3.3% and exports by 3.5%, followed by South America. In contrast, Europe and the Middle East are likely to see slower export growth, reflecting weaker demand and ongoing geopolitical disruptions.
Services trade, particularly digitally delivered services, continues to provide an additional buffer against physical disruptions. While transport and travel services face pressure, digital trade remains less exposed to geopolitical chokepoints, reinforcing its role as a stabilizing force.
WTO Director-General Ngozi Okonjo-Iweala emphasized that global trade resilience is being supported by high-technology products, adaptive supply chains, and the avoidance of escalatory tariff measures. However, she cautioned that sustained energy price increases could create broader economic pressures, including impacts on food security and business costs.
For economies like India, the dual dynamics present both risks and opportunities. While exposure to energy and fertilizer imports poses challenges, the global expansion of AI-related trade aligns with domestic ambitions in electronics and semiconductor sectors, offering potential gains in export competitiveness.
As global trade adjusts to these opposing forces, the balance between technological momentum and geopolitical stability will be crucial in shaping outcomes for 2026 and beyond. Continued investment in digital infrastructure, coupled with stable trade policies, will be key to sustaining growth in an increasingly uncertain global environment.