AI investment and Middle East conflict shape outlook for global trade

by Robert Staiger

The outlook for world trade in 2026 will be shaped by two powerful and opposite forces. On the one hand, the extraordinary momentum of investment in artificial intelligence (AI) continues to energize global demand for high-tech goods and digitally delivered services. On the other hand, the conflict in the Middle East - and the resulting spike in energy and transport costs - could weigh heavily on world trade and output.

The WTO Secretariat's latest Global Trade Outlook and Statistics 2026  captures this evolving picture, presenting the latest data for 2025 as well as new projections for 2026 and 2027. While trade proved more resilient than expected in 2025, some of the factors behind that resilience - such as frontloading of imports ahead of tariff hikes, and investment in AI-related infrastructure - are expected to be absent or reduced this year. This is expected to cause growth in global trade volume to slow in 2026 before it picks up in 2027.

A surprisingly strong trade performance in 2025 powered by AI and frontloading

World merchandise trade volumes expanded by 4.6 per cent in 2025, nearly double the growth expected a year earlier. Much of this strong growth came from the "AI surge": booming investment in data centres, processors, semiconductor equipment and other AI-enabling products. These goods accounted for almost half of global trade growth in 2025, despite representing only one-sixth of total merchandise trade.

Asia was, once again, the engine of global trade. The region contributed 71 per cent of total merchandise trade growth, with especially strong results from China, Singapore, Chinese Taipei and Thailand. North America also saw robust imports early in the year, partly due to frontloading of imports.

Services trade also continued its post-pandemic normalization. Travel growth moderated as pent-up demand eased, but digitally delivered services and other commercial services continued to show strong, steady growth.

A cooler, but still positive, outlook for 2026

The baseline scenario for trade growth in our Global Trade Outlook and Statistics points to slower merchandise trade growth of 1.9 per cent in 2026, before a modest pickup to 2.6 per cent in 2027. Services trade is expected to expand somewhat faster, by 4.8 per cent in 2026, rising to 5.1 per cent in 2027.

Two open questions increase uncertainty about our 2026 forecasts: the persistence of high oil prices and the durability of the AI boom.

On the one hand, a persistent impact of the Middle East conflict on energy and transport costs could have important negative implications for global output and trade. If oil price increases persist throughout 2026, we estimate that world merchandise trade growth could fall by 0.5 percentage points, dropping from 1.9 per cent to around 1.4 per cent.

Services trade, especially transport and travel, would be even more exposed to the impact of the Middle East conflict. Services growth could dip to 4.1 per cent from the baseline projection of 4.8 per cent, with services trade in the Middle East expected to contract because of cancelled flights, disrupted shipping routes and higher insurance costs.

On the other hand, AI-related spending continued to exceed expectations in early 2026. If this momentum persists, and demand for AI-enabling goods remains at 2025 levels throughout the year, global merchandise trade growth could add 0.5 percentage points, potentially offsetting much of the energy-related drag.

Persistent shifts in global trade patterns

Beyond short-term shocks, several structural shifts continue to reshape global trade.

AI-enabling goods are becoming a defining force in global commerce

The share of AI-enabling goods in world trade rose from around 13 per cent in 2023 to nearly 17 per cent by the end of 2025. Trade in these products grew by 21.9 per cent year-on-year in 2025.

North America is now the fastest-growing market for AI-related goods, but Asia remains the global hub, accounting for 62 per cent of total AI-enabling trade.

Fragmentation pressures have intensified

While we saw some stabilization in trade between geopolitically aligned trading blocs during 2023 and 2024, last year brought a renewed widening in the gap between intra-bloc and inter-bloc trade. Much of this was driven by further decoupling between the United States and China.

US imports from China fell 29 per cent in 2025, the sharpest decline in years. Meanwhile, China redirected export flows toward Asia, Africa and Latin America, leading to strong import growth in many emerging markets.

Share of world trade conducted at most-favoured-nation (MFN) rates dropped in 2025, but remains the dominant way economies trade

An analytical chapter in our Global Trade Outlook and Statistics shows that the share of world trade conducted under the WTO's non-discrimination principle of MFN treatment fell from 80 per cent in 2024 to around 72 per cent by early 2026, reflecting both the proliferation of tariff actions and the increasing use of preferential agreements. Nevertheless, nearly three-quarters of world merchandise trade still crosses borders under MFN tariffs.

To conclude, the key questions for global trade in 2026 are:

• Will the AI boom continue to propel trade at the same pace?
• How persistent will the energy shock from the Middle East conflict be?
• Will trade fragmentation pressures deepen - or stabilize?

As these developments unfold, the WTO will continue to monitor their implications for trade flows, supply chains and the broader global economy.