Middle East conflict threatens global trade growth, WTO warns

Global trade is expected to slow in 2026 after stronger-than-anticipated growth in 2025 driven by surging trade in AI-enabling products, the World Trade Organization (WTO) said. Economists warn that the ongoing conflict in the Middle East could further weigh on trade if energy prices remain elevated, potentially disrupting food and services trade due to transport and travel constraints.

The WTO’s latest Global Trade Outlook and Statistics, forecasts global merchandise trade growth slowing to 1.9% in 2026 from 4.6% in 2025, as trade normalizes following last year’s AI-related surge and preemptive imports to avoid new tariffs. Commercial services trade growth is projected to ease to 4.8% in 2026 from 5.3% in 2025. Combined goods and services trade would rise 2.7% in 2026 compared with 4.7% in 2025, while global GDP growth is expected to moderate slightly to 2.8% in 2026 and 2027.

In a high energy price scenario, with crude oil and LNG costs remaining elevated, GDP growth could fall 0.3 percentage points and trade growth by up to 1 percentage point in energy-importing regions, reducing merchandise trade volumes to 1.4% and services trade growth to 4.1%.

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… Sustained increases in energy prices could increase risks for global trade, with potential spillovers for food security and cost pressures on consumers and businesses. Nevertheless, WTO members can help cushion the impact by maintaining predictable trade policies and strengthening supply chain resilience.”

Disruptions through the Strait of Hormuz have also affected fertilizer supplies critical for agriculture, threatening major import-dependent producers including India, Thailand, and Brazil. Economists note that a short-lived conflict and continued AI spending could boost merchandise trade growth to 2.4% in 2026 and 2.7% in 2027.

By Vafa Guliyeva