WTO lifts goods trade forecast on AI boom but cuts services outlook amid Iran war

GLOBAL merchandise trade is holding up much better than was expected earlier in 2026, the World Trade Organization said, as artificial intelligence drives demand and fragmentation between geopolitical rivals stabilises.

The volume of global goods trade in 2026 is forecast to increase 3.9 per cent, a sharp upgrade from the WTO’s baseline prediction in March for a 1.9 per cent gain, the Geneva-based forum said in a report on Thursday (Oct 8). AI-enabling goods accounted for 47 per cent of the value of that growth in the first half of 2026.

“While high commodity prices may persist as a result of bottlenecks constraining flows of fuels and fertilisers, continued AI investment and the broader digitisation of the global economy are expected to keep merchandise trade growth above the rate of world GDP growth in 2027,” the WTO said.

Those higher energy costs are, however, affecting services – the WTO lowered its growth projection for this category of trade to 3.3 per cent for 2026, from the 4.8 per cent forecast six months ago, with higher fuel costs weakening the travel sector. 

For 2027, the WTO sees goods trade increasing 4.1 per cent and services 6.4 per cent. Combining the two categories, total trade globally will advance 4.7 per cent in 2027 after a 3.7 per cent rise this year.

The WTO report recounts a remarkable and sudden tailwind for international commerce just as US President Donald Trump re-entered office at the start of 2025 with tariff policies aimed at reducing imports into the world’s largest economy and spurring domestic production.

Growth rates for trade in AI-enabling goods moved in line with other merchandise until 2024. That year, such commerce surged 16 per cent, and the pace then nearly doubled in 2025. During the first half of 2026, the pace clocked 67 per cent, the WTO said – pushing the AI share of overall goods trade to 14.8 per cent, roughly double the level measured from 2016 to 2023.

“Surging import demand related to an investment boom in artificial intelligence has overcome headwinds from the ongoing conflict in the Middle East,” the report stated.

Concentrated benefits

Yet the benefits remain highly concentrated. In 2025, the top 10 traders of AI-enabling goods handled some 85 per cent of world exports and 80 per cent of imports, the WTO said. 

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“An integrated world economy and a rules-based trading system provide economies flexibility to keep essential products flowing to businesses and households that need them,” said Ngozi Okonjo-Iweala, the WTO director-general. “Nevertheless, some have felt the shock more than others, and not everyone can access emerging opportunities like AI.”

In the aftermath of Russia’s 2022 full-scale invasion of Ukraine, trade diverged along geopolitical lines, boosting cross-border commerce with like-minded partners and raising concerns about the rise of two main economic blocs. But that gap has narrowed recently, the WTO report said.

“The broader pattern of bloc-based trade fragmentation has not intensified at the same pace as in recent years,” it said. “These developments point to a more mixed picture of trade fragmentation: geopolitical tensions continue to affect trade patterns but the divergence between geopolitical blocs is no longer widening.” BLOOMBERG