World merchandise trade projected to grow 0.9% in 2025: WTO

World merchandise trade is now projected to grow 0.9% in 2025, up from the -0.2% contraction forecasted in April but down from the 2.7% estimate pre-dating the tariff increases. The upgrade is mostly due to frontloading of imports in the United States, WTO economists said in a forecast update. However, higher tariffs over time will weigh on trade, bringing next year’s expected trade volume growth down to 1.8% from 2.5% previously.

 A surge of imports in the United States in the first quarter ahead of widely anticipated tariff hikes contributed to the upward revision to the forecast for 2025 issued in the April Global Trade Outlook and Statistics report. Increased tariffs—including those that took effect this week—will dampen trade in the second half of 2025 and in 2026.

 WTO Director-General Ngozi Okonjo-Iweala said: “Global trade has shown resilience in the face of persistent shocks, including recent tariff hikes. Frontloaded imports and improved macroeconomic conditions have provided a modest lift to the 2025 outlook. However, the full impact of recent tariff measures is still unfolding. The shadow of tariff uncertainty continues to weigh heavily on business confidence, investment and supply chains. Uncertainty remains one of the most disruptive forces in the global trading environment.”

 Asian economies are projected to remain the largest positive driver of world merchandise trade volume growth in 2025, although their contribution in 2026 will be smaller than predicted in April. North America will weigh negatively on global trade growth in both 2025 and 2026, but its negative impact this year will be smaller than previously estimated due to stronger-than-expected frontloading of imports in the US in the first quarter. Meanwhile, Europe's contribution to trade in 2025 has gone from moderately positive to slightly negative. Other regions, including economies whose exports are largely energy products, will see their positive contribution to trade growth shrink between 2025 and 2026 as lower oil prices reduce export revenues and dampen import demand.

 The higher tariffs that came into force on 7 August will weigh increasingly on trade, but this will be balanced against positive impacts from frontloading and inventory accumulation, which will have to be unwound at some point. Positive tailwinds have also come from an improved macroeconomic climate, although this is subject to a high degree of uncertainty.

WAM