The World Trade Organization has cut its 2025 global trade growth forecast into negative territory, warning that rising tariffs and mounting policy uncertainty, including under US President Donald Trump’s renewed protectionist measures, are reversing gains made in 2024 and risking long-term fragmentation of the world economy.
In its 2025 Annual Report, the WTO said world merchandise trade volumes, which rose 2.9 per cent last year, are now expected to contract by 0.2 per cent this year — a downgrade of nearly three percentage points from earlier forecasts. The downward revision comes after new tariff announcements in early 2025 prompted a reassessment of the outlook.
While the report does not name specific US measures, the WTO’s April 2025 Global Trade Outlook cited the impact of tariff hikes on goods from key trading partners. Economists warned that these tariffs — along with retaliatory actions — are feeding uncertainty, disrupting supply chains and indirectly depressing services trade.
Services trade caught in crossfire
Although services are not directly subject to border tariffs, the WTO said higher duties on goods reduce demand for related services such as transport and logistics, while slower economic growth curtails spending on travel and investment-linked services.
The forecast for services trade growth in 2025 has been cut to 4 per cent from 5.1 per cent under a low-tariff scenario.
In 2024, commercial services trade grew 9 per cent globally, with travel up 13 per cent and computer services, a key category of digitally delivered exports, rising 12 per cent to reach $1 trillion. The Middle East was the only region to see a contraction, with a 1 per cent fall in exports.
Risk of trade bloc fragmentation
Director-General Ngozi Okonjo-Iweala warned in the report’s opening message that “potential signs of fragmentation” along geopolitical lines could cause the worst welfare losses for low-income economies.
“Multilateral cooperation itself is being called into question,” she said.
The report notes that despite new trade measures, most-favoured-nation tariff terms still underpin around 74 per cent of global merchandise trade, preserving some stability.
However, WTO monitoring shows $888 billion worth of trade was affected by new restrictions between October 2023 and October 2024 — half a trillion dollars more than in the previous period.
The WTO urged members to use the organisation’s committees to address health, safety and regulatory standards to prevent further trade frictions, and to work towards concluding pending negotiations on agriculture, fisheries subsidies and digital trade.
