The World Trade Organization (WTO) has significantly reduced its 2025 global trade forecast. Initially projecting a 3% growth, the organization now anticipates a 0.2% decline in world merchandise trade. This downgrade reflects the ongoing uncertainties in international trade policies, particularly amid tensions between the United States and China.
Global Trade Outlook for 2025
The WTO’s revised forecast indicates that global trade in goods may decrease by 0.2% this year, with a further drop of 1.5% possible if trade conditions worsen. This marks a stark contrast from the previous expectation of growth. However, a modest recovery of 2.5% is expected in 2026.
Global trade in commercial services is also expected to grow, but at a slower pace of 4%, down from previous projections. WTO Director-General Ngozi Okonjo-Iweala expressed concern over the uncertainty surrounding trade policies, which could significantly affect the world’s most vulnerable economies.
Tariff Tensions and Economic Impact
The recent easing of tariff tensions between the United States and China has provided temporary relief. Despite this, the ongoing trade uncertainty remains a significant threat to global growth. WTO economists forecast global GDP growth to slow to 2.2% in 2025, with a slight recovery to 2.4% in 2026. Additionally, the international rating agency Fitch Ratings has downgraded its global GDP growth forecast, now predicting the worst economic performance since 2009, excluding the pandemic period.
Regional Impact of Tariff Measures
The effects of tariff policies on global merchandise trade will vary sharply across different regions. Economists expect that the impact of these trade tensions will continue to disrupt global trade flows in 2025.
Conclusion
With the forecasted slowdown in global trade and economic growth, the uncertainty surrounding trade policies remains a significant challenge. The WTO’s downgrade of its trade outlook reflects the potential risks facing international markets. As global economies adjust to these changes, further trade tensions and tariff measures could further affect growth.
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