WTO October Outlook update: While global trade struggles, AI commerce surges 20% in 2025 - Trade Treasury Payments

Global trade has shown resilience in 2025 despite growing challenges from tariff escalation and policy uncertainty, according to the World Trade Organisation’s latest “Global Trade Outlook and Statistics Update: October 2025” released on 7th October. It reveals that while global trade is doing better than expected in the short term, it will face bigger challenges in the coming year.

Trade growth exceeds expectations despite policy challenges

Global merchandise trade volume is expected to grow by 2.4% in 2025, significantly exceeding the modest 0.9% growth forecast published in April. This unexpected boost primarily comes from three factors i) import frontloading before new tariffs took effect ii) favourable economic conditions in major countries iii) a significant increase in artificial intelligence goods such as semiconductors and telecommunications equipment.

However, this strength looks temporary. The forecast for 2026 has dropped to just 0.5%, suggesting that the full impact of trade barriers has only been delayed, not avoided. As inventory accumulated in anticipation of tariffs begins to unwind, the trading system could shrink when these temporary buffers deplete.

Asia is the highest contributing geography in 2025, but it will also bear the brunt of trade tensions and uncertainty in 2026.

The growth of service export is also likely to slow down in 2025 to 4.6%, from 6.8% last year. It would further reduce to 4.4% in 2026.

“Trade resilience in 2025 is thanks in no small part to the stability provided by the rules-based multilateral trading system. Yet complacency is not an option. Today’s disruptions to the global trade system are a call to action for nations to reimagine trade and together lay a stronger foundation that delivers greater prosperity for people everywhere,” said WTO Director-General Ngozi Okonjo-Iweala.

AI-related trade driving global commerce forward

One of the key findings is that AI-related products are now the main reason for global trade growth. In the first half of 2025, these goods increased by more than 20% compared to the previous year. Although they account for less than one-tenth of global merchandise trade, they contributed to nearly half of the overall trade growth during this period.

This pattern signals a basic change in global commerce centred around artificial intelligence infrastructure. From raw silicon to advanced computer chips and server equipment, economies worldwide are reorienting production and trade patterns to establish positions in these high-value supply chains.

The geographic spread of this growth shows both old patterns and new shifts. 

Asia accounts for over 50% of global exports in AI-related components. North America contributes approximately one-fifth of global AI-related trade growth.

Additionally, emerging markets across Southeast Asia, Latin America, and Africa are gaining market share, with combined growth rates exceeding 15% in these regions

Regional trade flows show distinct patterns

Trade performance across regions shows big differences in the first half of 2025. Asia recorded the fastest export growth at 10.4%, while North America saw slower growth at 3.0%. Europe stayed relatively flat with a 0.3% decrease, highlighting regional differences in adapting to changing trade patterns.

The increase in South and Central American imports was particularly sharp, rising by 14.7%, followed closely by Africa at 13.7%. These figures suggest that supply chains and trade flows may be changing as major economies seek alternative suppliers due to policy uncertainty.

The limits of trade policy in fixing imbalances

WTO’s trade imbalances section offers insights into the limitations of using trade policy to address ongoing trade deficits. Through computer modelling using the WTO Global Trade Model, economists show that attempting to eliminate bilateral deficits through tariffs incurs substantial economic costs, merely shifting imbalances to other trading partners rather than addressing the underlying issues.

North America has a large merchandise trade deficit with Asia, which prompted the simulation of a scenario where North America imposes additional tariffs on goods imports from Asia. The simulations indicate that to eliminate the bilateral deficit, tariffs would need to be increased by approximately 40 percentage points. However, this would also increase trade deficits with other regions.

This highlights that trade imbalances occur because of differences in how much countries save and invest, not because of unfair trade practices. Tariffs do not fix these imbalances and can harm growth and productivity instead.

Economic outlook: Caution warranted

The WTO’s October outlook describes a global trading system caught between short-term strength and longer-term vulnerability. The positive growth numbers for 2025 hide deeper structural challenges that will likely emerge more clearly in 2026.

Policymakers face tough situations with trade imbalances. To address these issues, they need to collaborate to find mutually beneficial economic solutions rather than relying on one-sided trade barriers. Without such coordination, the global trading system risks further breaking apart with substantial costs to growth and prosperity worldwide.

Access the full report here.