The World Trade Organization (WTO) has released a cautious forecast for global trade in 2025, projecting a 0.2% decline in merchandise trade volume under current conditions. This estimate is nearly three percentage points lower than earlier projections under a “low tariff” scenario, according to the WTO’s Global Trade Outlook and Statistics report published on April 16.
The report also warns that if trade tensions intensify, global trade could shrink even further—up to -1.5% in 2025.
Services Trade Also Slows, Risks Rising
While services trade is not directly impacted by tariffs, it’s still expected to feel the heat. WTO economists have downgraded the commercial services trade growth forecast to 4.0%, slower than previously expected.
WTO Chief Sounds Alarm on Policy Uncertainty
WTO Director-General Ngozi Okonjo-Iweala expressed deep concern over growing trade policy tensions—particularly between the US and China.
“The recent de-escalation of tariff tensions has temporarily relieved some of the pressure on global trade,” she said.
“However, the enduring uncertainty threatens global growth and especially hurts the most vulnerable economies.”
She urged WTO member countries to use this moment to bring fresh momentum into global trade by streamlining rules, modernizing agreements, and ensuring a level playing field.
Rising Tariff Risks Threaten Further Downturn
At the beginning of 2025, the WTO had anticipated a period of trade recovery. However, a wave of new tariff measures introduced since January prompted a serious revision of expectations.
Two major threats have been highlighted:
- Reactivation of suspended US reciprocal tariffs, which alone could cut trade growth by 0.6 percentage points.
- Spreading trade policy uncertainty, which may shave off another 0.8 percentage points.
Combined, these risks could cause a 1.5% decline in global merchandise trade.
2024 Showed Promise, But Momentum May Not Last
In contrast, 2024 ended on a high, with global merchandise trade growing 2.9%, slightly outpacing global GDP growth of 2.8%. This marked the first time since 2017 (excluding the COVID-19 rebound) that trade outpaced economic output.
However, that momentum may not continue. WTO Chief Economist Ralph Ossa emphasized that
“Trade policy uncertainty has a significant dampening effect on trade flows, reducing exports and weakening economic activity.”
He warned that tariffs have unintended consequences, urging policymakers to take a balanced, long-term view.
Regional Impacts Will Vary
The report notes that the impact of tariffs in 2025 will vary by region, affecting some economies more severely than others, depending on their exposure to recent trade measures.
As the world braces for a turbulent year in trade, the WTO’s message is clear: stability, cooperation, and policy clarity are key to avoiding a deeper economic slowdown.
