Global services trade growth cut in half: What the WTO’s Q1 2025 data reveals - Trade Treasury Payments

Services trade forms the critical pillar of the global economy. From the financial transactions that power investments to the professional services that help businesses expand globally, services trade is the invisible thread that connects global trade. 

However, this sector has hit a significant speed bump, reveals the latest numbers announced by the World Trade Organisation (WTO) on 31st July. According to WTO statistics, the Services trade grew by just 5% year-on-year in Q1 2025, half the pace recorded throughout 2023 and 2024. This sudden deceleration signals potential trouble ahead, which can also impact global economic growth.

Dollar strength and economic uncertainty create headwinds

Two primary factors are driving this slowdown: the appreciation of the US dollar against the euro and other major currencies, and increasing economic uncertainty worldwide. Combined, they led to challenging conditions for service exporters across most major economies.

The regional impact showcases disparities. Services exports from both Europe and North America rose by a modest 3% year-on-year in Q1 2025, a sharp decline from their respective 8% and 11% growth rates in Q1 2024. Asian markets, however, showcased considerable resilience, maintaining growth at 9%. This contrast indicates evolving patterns in global economic momentum, which is tilting toward Asian economies. 

Other commercial services feel the pressure

The WTO data identifies “Other commercial services” as the primary sector driving the overall deceleration. This diverse category includes numerous digitally deliverable services ranging from financial to professional services. It represented approximately 60% of global services trade in 2024, with 40% of the export contribution coming from Europe alone. 

The remaining 40% of services exports are distributed across transportation, travel, and other categories that have shown different patterns of resilience during this period. 

The structural composition of commercial services includes the majority of the important sectors, ranging from communication and transportation to financial services and business and professional services. All of these are crucial for global commerce.

A closer look at key subsectors

“Other business services”, covering professional, technical, and research-related services, showed significant cooling across major economies. The United States saw growth in this category at 4% year-on-year, down from 8% in Q1 2024. European Union exports appeared stagnant in dollar terms, though they managed a 4% increase when measured in euros.

Financial services performance was particularly weak, with global exports growing just 3% year-on-year, reflecting diminished investment activity amid heightened global economic uncertainty. Both the European Union and the United States recorded only 2% year-on-year growth in financial services exports, while Switzerland experienced an outright 3% decline. The UK bucked this trend with a 10% increase, driven by 13% growth in exports to the US.

Intellectual property services expanded by 4% year-on-year for Q12025, down from 7% in Q1 2024, with the EU and US accounting for nearly 70% of global exports. On the other hand, construction services exports fell 15% in Q12025 after a 25% growth in Q1 2024. China, representing 28% of global construction exports, saw a 25% decline, while Korea fell 15% and the EU 6%. This suggests deteriorating confidence in physical infrastructure investment.

As per the WTO data, computer services emerged as a bright spot, with minimal impact from the broader slowdown. India’s exports grew by 13%, and Ireland’s by 9%, driven by sustained demand for AI, digital transformation, and cybersecurity solutions.

Lastly, transport exports grew at 3% for January to March 2025 globally, with Asia again outperforming with a 10% growth. China led with 31% growth, while South and Central America saw shipping service payments surge 19% on increased goods demand. This was also supported by an increase in international travel, which rose by 5% and finally exceeded pre-pandemic levels by 3%. 

Broader trends across major trading nations

Services trade performance varied significantly across major traders in the first five months of 2025, according to the WTO. Asian economies continued to showcase strength, with double-digit export growth recorded in China (+13%, through June), India (+12%), and Japan (+11%).

In North America, the United States and Canada saw diverging trends. US service exports rose by 5%, while Canada recorded a 6% decline. This 11% gap between neighbouring economies highlights how even within regions, performance varies substantially.

The EU’s service exports to non-member countries rose by a modest 3%, while imports from outside the Union grew more sharply, increasing by 6%. This imbalance suggests that the EU is becoming a net consumer rather than a provider of services in its external trade relationships.

The United Kingdom recorded marked growth, with exports up 9% and imports rising by 13%. 

What does this mean for the global economic outlook?

The services trade slowdown raises questions about the trajectory of the global economy. Unlike previous economic challenges that often affected goods trade while services remained broadly unaffected, this WTO data suggests that more fundamental economic pressures are at work. Currency volatility, particularly the strengthening US dollar, is a major factor affecting trade measurements and likely influencing actual trade flows. 

Perhaps most concerning is the evidence of diminished risk appetite in global markets. The weakness in financial services points to reduced investment activity, a potential harbinger of broader economic caution. If this persists, we could see ripple effects throughout the global economy.

As the global economy navigates these evolving trade dynamics, the ability to adapt to changing patterns of services trade will likely become increasingly important for maintaining economic resilience in an uncertain environment.

Access the complete data here.