WTO slashes 2025 trade growth forecast, warns of deeper slump

The World Trade Organisation (WTO) sharply cut its forecast for global merchandise trade from solid growth to a decline on Wednesday, saying further US tariffs and spillover effects could lead to the heaviest slump since the height of the COVID pandemic.

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The WTO said it expected trade in goods to fall by O.2% this year, down from its expectation in October of 3.0% expansion. It said its new estimate was based on measures in place at the start of this week.

"I'm very concerned, the contraction in global merchandise trade growth is of big concern," WTO Director General Ngozi Okonjo-Iweala told reporters in Geneva.

US President Donald Trump imposed extra duties on steel and car imports as well as more sweeping global tariffs before unexpectedly pausing higher duties on a dozen economies. His trade war with China has also intensified with tit-for-tat exchanges pushing levies on each other's imports beyond 100%.

The WTO said that, if Trump reintroduced the full rates of his broader tariffs that would reduce goods trade growth by 0.6 percentage points, with another 0.8 point cut due to spillover effects beyond US-linked trade.

Taken together, this would lead to a 1.5% decline, the steepest drop since 2020.

"If we have contraction in global merchandise the concern is spill over into broad GDP growth. We've seen that the trade concerns can have negative spill overs into financial markets, into other broader areas of the economy," OkonjoIweala added. She also raised alarm about the impact on developing countries.

The head of the WTO said her greatest fear was that the economies of China and the US were decoupling from one another.