GENEVA: The WTO slashed its forecast for global trade growth in 2025, warning that a build-up of tariff hostilities, chiefly U.S. policies, could push global trade into its most severe downturn since the COVID-19 pandemic. The new forecast expects goods trade to shrink by 0.2% as opposed to the earlier expectations of 3% growth made in October.
The Director-General of the WTO, Ngozi Okonjo-Iweala, expressed grave concern about the outlook at the global level. This has been further aggravated by renewed U.S. tariffs under President Donald Trump and retaliatory measures taken by countries such as China. The WTO warned that all previously announced U.S. tariffs being re-imposed would tend to bring down global goods trade by a maximum of 1.5%-the largest fall since the year 2020.
One of the most vital issues raised is the growing distance the U.S. economy and the Chinese economy apart, with the value of merchandise trade between the two projected to decline 81%. Without exceptions for key items like smartphones, the figure could have achieved 91%. The scenario presents the risk of economic fragmentation on a long-term global scale.
It is also broader than that, weakening demand for transport, logistics, and travel services, as the 2025 growth rate projections for global commercial services trade now stand at 4% as a result of the downward adjustment from 6.8%, which was expected in 2024.
Experts caution that such ambiguity in trade policy, which surrounds it today, could hinder investments and growth. The WTO has cautioned that both diplomatic engagements.
[Source Credit: Business Recorder]
