WTO Sounds Alarm on Trade Risks as 2025 Outlook Weakens
Global merchandise trade is expected to decline by 0.2% in 2025, with North America facing a significant 12.6% drop in exports, the World Trade Organization (WTO) has warned.
The decline could be even steeper, falling by 1.5%, if trade tensions worsen, including the reactivation of US “reciprocal tariffs” and increasing policy uncertainty.
Here are the WTO’s key concerns:
- Global trade forecast: 0.2% decline in merchandise trade, with North American exports down 12.6%.
- Worst-case scenario: Decline could reach 1.5% if tensions escalate.
- Services trade growth: Revised down to 4.0% from earlier expectations.
- Impact on least-developed countries: Vulnerable economies hit hardest by the trade slowdown.
WTO forecasts decline in 2025, a reversal of 2024’s trade growth.Image: World Trade Organization
The WTO also forecasts slower growth for services trade, which is expected to rise by 4.0%, down from earlier projections. Director-General Ngozi Okonjo-Iweala highlighted concerns about the global impact, saying, “The enduring uncertainty threatens to act as a brake on global growth, with severe negative consequences for the world, particularly for the most vulnerable economies.”
The report underscores the risks posed by continued trade policy volatility, especially for export-dependent economies and least-developed countries.
Meanwhile, the Brookings-FT Tracking Indexes for the Global Economic Recovery posted similar findings, with one analyst commenting: “Every open economy that relies on trade is going to get squeezed, and on top of that, you will have [negative] confidence effects.”
