Judul : Middle East conflict likely to worsen 2026 trade slump
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Middle East conflict likely to worsen 2026 trade slump
By Sharon Atieno Onyango
World trade is set to ease in 2026, following a spike in 2025 driven by a surging trade in AI-enabling products. However, the Middle East Conflict could worsen the situation.
This is according to the recently launched “Global Trade Outlook and Statistics” by the World Trade Organization (WTO).
The report finds that merchandise trade volume growth would drop from 4.6% in 2025 to 1.9% in 2026 before picking up to 2.6% in 2027 while services trade volume would see growth easing from 5.3% in 2025 to 4.8% in 2026, then rising to 5.1% in 2027.
Although in 2025, world goods and services trade grew around 4.7%, exceeding world GDP growth of 2.9%. In 2026, goods and services trade and GDP should grow at around the same rate (2.7% for trade, 2.8% for GDP).
The report notes that the current value of world merchandise trade measured by exports was US$ 26.26 trillion in 2025, this a 7% increase compared to 2024. Services trade reached US$ 9.56 trillion last year, up 8% over the same period. Goods and services trade, on a balance-of-payments basis, came to US$ 34.65 trillion in 2025, up 7% year-on-year.
Despite this, WTO experts note that “if sustained, the high oil prices related to the recent Middle East conflict could shave 0.5 percentage points off the 1.9% merchandise trade growth in 2026. Conversely, growth could also be boosted by 0.5 percentage points if trade in AI-related goods remains as strong as in 2025.”
Notably, the impact of the Middle East conflict on services trade could be as strong as on merchandise, subtracting 0.7 percentage points from growth in 2026, due to significant downside risks to international transport and travel.
“A prolonged conflict could keep transport and fuel costs structurally elevated, disrupt key shipping and air routes, and weigh on regional tourism and global travel demand,” the report cautions.
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%, 70% and 35% of their urea imports respectively. Gulf states face a food security challenge as well, with import dependency averaging 75% for rice and exceeding 90% for corn, soybeans and vegetable oil – commodities that would face higher costs through alternative routes.
Speaking during the launch of the report, WTO Director-General Ngozi Okonjo-Iweala said: “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. However, this baseline forecast is under pressure from the conflict in the Middle East. Sustained increases in energy prices could increase risks for global trade, with potential spillovers for food security and cost pressures on consumers and businesses.”
Dr. Okonjo-Iweala stressed that WTO members can help cushion the impact and ease the economic burden on people worldwide by maintaining predictable trade policies and strengthening supply chain resilience.
Trade growth in 2025
In 2025, the volume of world merchandise trade was up 4.6% based on data available as of 10 March, which are subject to revision. Trade growth last year was above the 2.4% increase predicted in the October 2025 release of the Global Trade Outlook and Statistics but close to the baseline projection underlying it.
The report notes that the overall negative impact of tariffs in 2025 was less than predicted because of the suspension of new US tariffs until August, the limited amount of retaliation from other economies, and numerous tariff exemptions.
Furthermore, a surge in demand for AI-enabling goods offset the negative impact on global trade of higher tariffs and uncertainty. In value terms, trade in AI-enabling goods increased by 21.9% year-on-year, rising to US$ 4.18 trillion in 2025 from US$ 3.43 trillion in the previous year.
These AI products accounted for 42% of total global trade growth in 2025, despite representing only one-sixth of global trade. Notably, key AI-enabling goods such as chips, semiconductors and data transmission equipment are exempt from most new tariffs.
For 2026, recent tariff developments have largely represented adjustments in approach rather than fundamental shifts in policy. The WTO economists estimate that the share of world trade conducted on a most-favoured-nation (MFN) basis (treating all trading partners equally) stood at 72% by the end of February 2026 after fluctuating throughout 2025 in the wake of unprecedented policy shifts.
Their analysis confirms that MFN tariffs remain the dominant framework governing international trade across most sectors of the global economy.
Regional merchandise trade projections
Under the baseline scenario, the report notes that Asia is expected to register the fastest merchandise import growth in 2026 (3.3%), followed by Africa (3.2%), South America (2.5%), Europe (1.3%) and the Middle East (1.0%).
North America’s merchandise imports would remain flat (0.3%) in this scenario while those of the Commonwealth of Independent States (CIS) region would contract (-2.0%).
On the merchandise export side, the report observes that Asia would again have the fastest growth of any region (3.5%) as would South America (3.5%), followed by North America (1.4%), the CIS (1.3%) and Africa (1.2%). On the other hand, merchandise exports of the Middle East would slow sharply (0.6%) while Europe’s would continue to stagnate (0.5%).
Least-developed countries will register 4.5% merchandise import growth and 2.9% merchandise export growth in 2026 under the baseline scenario.
Under the high energy price scenario, net fuel-importing regions such as Asia and Europe would face the biggest cuts in merchandise import growth between the high energy price and baseline scenarios; economies that are net fuel exporters that are still able to export would broadly enjoy more income and therefore more import growth.
Provided by SyndiGate Media Inc. (Syndigate.info).
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