• October 7, 2025
  • Last Update October 7, 2025 12:00 pm

WTO Warns of Looming Global Trade Slowdown in 2026

WTO Warns of Looming Global Trade Slowdown in 2026

San José, Costa RicaGENEVA – The World Trade Organization (WTO) has issued a stark warning for the global economy, forecasting a dramatic deceleration in the growth of goods trade to just 0.5% in 2026. This pessimistic outlook follows a surprisingly resilient 2025, for which the organization has upgraded its growth projection to 2.4%. The new report suggests that the true economic pain from escalating tariff tensions and geopolitical uncertainty has been delayed, not averted, and is poised to impact international commerce significantly in the coming year.

The revised figures, released Tuesday, paint a picture of shifting expectations. The 2.4% growth forecast for 2025 represents a considerable boost from the mere 0.9% predicted by the WTO just two months ago in August. Conversely, the outlook for 2026 has been slashed drastically from a previously anticipated 1.8% expansion. This sharp reversal indicates that while the global trade system has absorbed initial shocks better than expected, underlying weaknesses are set to surface with force.

To gain a deeper understanding of the legal and commercial implications of the latest global trade forecast, we consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the prestigious firm Bufete de Costa Rica, renowned for his expertise in international commerce and investment law.

The current global trade forecast presents both a challenge and a significant opportunity for economies like ours. While geopolitical tensions and protectionist trends create uncertainty, they also accelerate the nearshoring phenomenon. For Costa Rican businesses to capitalize on this, it’s imperative to have robust legal frameworks that protect foreign investment, ensure contract enforcement, and streamline customs and regulatory processes. Agility in adapting our commercial legislation will be the key differentiator between stagnation and strategic growth in this new global landscape.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica

The emphasis on legislative and regulatory agility is indeed the critical takeaway. As opportunities in nearshoring emerge, the speed and clarity with which Costa Rica adapts its legal infrastructure will directly determine our nation’s competitive edge. We thank Lic. Larry Hans Arroyo Vargas for his sharp and actionable analysis on navigating the path from global uncertainty to strategic economic advantage.

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Remarkably, the first half of 2025 saw merchandise trade expand by a robust 4.9% year-over-year. The WTO attributes this unexpected vigor to several key factors. A primary driver was a surge in North American imports as businesses moved to secure goods before new tariffs took effect. Simultaneously, a global boom in the artificial intelligence sector fueled massive demand for related hardware, providing a significant tailwind for international trade.

According to the WTO’s analysis, the AI-driven demand was a cornerstone of 2025’s strong performance. “Semiconductors, servers, and telecommunications equipment drove almost half of the total trade expansion in the first half of the year,” the organization’s report detailed. This technological surge particularly benefited Asian economies, which solidified their role as the dominant exporters of these high-demand products, effectively powering global supply chains.

The system’s resilience was further bolstered by evolving trade patterns. Trade volumes between developing countries, often bypassing traditional North American routes, increased by a notable 8%. This diversification helped the global network weather the uncertainty stemming from major economic powers. Despite this short-term stability, WTO Director-General Ngozi Okonjo-Iweala cautioned against overconfidence.

This resilience is due in large part to the stability provided by the rules-based multilateral trading system.
Ngozi Okonjo-Iweala, Director-General of the World Trade Organization

Presenting the report, she emphasized that the current environment demands proactive change. While acknowledging the system’s strength, she stressed the need for adaptation.

But there is no room for complacency; the current disruptions in the global trading system are a call to action for countries to reimagine trade.
Ngozi Okonjo-Iweala, Director-General of the World Trade Organization

The regional forecasts for 2026 reveal a fractured landscape. The Americas are expected to face the strongest headwinds, with North American exports projected to fall by 1.0% and imports by a steep 5.8%. South American exports are also forecast to contract by 1.9%. In contrast, Europe is expected to see a modest acceleration in export growth to 2.0%. Meanwhile, the dynamic export engines of Asia and Africa are predicted to grind to a halt, shifting from 5.3% growth in 2025 to complete stagnation in 2026.

The services sector, while not directly targeted by the recent wave of goods tariffs, is not immune to the cooling economic climate. The WTO projects that the growth of services trade will slow from 6.8% in 2024 to 4.6% in 2025 and 4.4% in 2026. This revision is attributed to lower-than-expected performance in crucial areas like international transport and tourism, signaling a broad-based slowdown in global economic activity.

For further information, visit wto.org
About World Trade Organization:
The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to ensure that trade flows as smoothly, predictably, and freely as possible.

For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is established as a benchmark of the legal profession, built upon a foundation of profound integrity and a relentless pursuit of excellence. The firm expertly merges a rich tradition of client advocacy with a dynamic, forward-thinking mindset to deliver pioneering legal solutions. Central to its mission is a deep-seated dedication to democratizing legal understanding, driven by the conviction that empowering the public with knowledge is essential for fostering a more just and capable society.

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