On March 19, the World Trade Organization (WTO) warned that the conflict in the Middle East could put significant pressure on global trade, which is already slowing down, with forecasts predicting that merchandise trade volume will only increase by 1.4% this year compared to 4.6% in 2025.

The WTO's annual global trade outlook report was released nearly three weeks after conflicts erupted and energy prices soared, raising fears of an impending major economic crisis.

WTO Director-General Ngozi Okonjo-Iweala warned: "The continued rise in energy prices could increase risks to global trade, with potential impacts on food security and cost pressures on consumers and businesses."

Since the conflict erupted, WTO economists have been working to revise their annual economic forecasts. Amid uncertainty about the conflict's impact and duration, the WTO has presented two possible scenarios for how global trade will develop this year.

In the first scenario, which disregards energy price fluctuations, global merchandise trade volume growth is projected to slow this year to 1.9%, down from 4.6% in 2025. This scenario assumes a slight slowdown in global gross domestic product (GDP) growth from 2.9% in 2025 to 2.8% in 2026 and 2027.

According to the WTO, this scenario would see goods trade "normalize" this year despite the conflict, after having grown stronger than expected in 2025, particularly thanks to the boom in artificial intelligence (AI) related products.

Okonjo-Iweala said, "This outlook reflects the resilience of global trade, driven by trade in high-tech products and digitally delivered services, supply chain adaptation, and avoidance of tariff retaliation." However, she cautioned, "This forecast is under pressure from the conflict in the Middle East."

In the second scenario, the WTO warns that if crude oil and liquefied natural gas prices remain high throughout the year, it will reduce the 2026 GDP forecast by 0.3 percentage points and the 2026 trade forecast by 0.5 percentage points. This means that the volume of goods trade will only increase by 1.4% in the high energy price scenario. Trade in services will also grow at a slower pace, at 4.1% this year.

Ms. Okonjo-Iweala emphasized: "WTO members can help mitigate the impact and lessen the economic burden on people around the world by maintaining predictable trade policies and strengthening the resilience of supply chains."

WTO economists note that there is also the potential for stronger-than-expected growth in goods trade if the conflict in the Middle East does not drag on and if AI-related trade remains robust. In that case, goods trade growth could reach 2.4% this year and 2.7% in 2027.

Source: Tin Tuc News

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