UPDATE 1-WTO downgrades global trade growth forecast to 0.5% for next year

* 2026 outlook 'concerning' but system is resilient, says WTO head * 2025 trade growth boosted by front-loading of goods to avoid tariffs * Trade in AI-related goods this year also driving growth (Adds details from the WTO report and context in paragraphs 5-18) By Olivia Le Poidevin GENEVA, Oct 7 (Reuters) – The World Trade Organization sharply lowered its 2026 forecast for global merchandise trade volume growth to 0.5% on Tuesday, citing expected delayed impacts from U.S. President Donald Trump's tariffs. It marks a significant revision down from its previous estimate in August of 1.8% growth. "The outlook for next year is bleaker … I am very concerned," Director-General Ngozi Okonjo-Iweala told reporters in Geneva. WORLD TRADING SYSTEM SHOWING RESILIENCE However, she said the world trading system is showing resilience, with the rules-based multilateral system providing some stability amid trade turmoil. For 2025, the WTO upgraded its forecast for global trade volume growth to 2.4%, from 0.9% previously, driven primarily by the front-loading of imports into the United States ahead of tariff hikes and growth in the trade of AI-related goods. It is still below the 2.8% growth seen in 2024. Trump's tariff decisions since he took office in January have shocked financial markets and sent a wave of uncertainty through the global economy. On August 7, Trump imposed higher tariffs on imports from dozens of countries, leaving major trade partners like Switzerland, Brazil and India scrambling for a better deal, while the EU struck a deal that set duties at 15% on most EU goods imported into the United States. GROWTH IN 2025 BUT OUTLOOK GLOOMY FOR 2026 Overall world merchandise trade volume growth is expected to slow from 2.8% last year to 2.4% this year and 0.5% next year. The WTO also forecasts global GDP growth to ease slightly from 2.7% in 2025 to 2.6% in 2026. "Tariff measures are weighing on trade, even though front-loading and the suspension of many duty hikes between April and August have pushed their effects back into the latter part of this year, and especially into next year," Okonjo-Iweala said. In the first half of 2025, world merchandise trade volume, measured by the average of exports and imports, increased by 4.9% year-on-year, with trade value rising 6% compared to 2% growth in 2024, according to the WTO report. Consequently WTO economists upgraded their trade growth forecast for this year to 2.4%, above April's prediction of a 0.2% fall. The rush of exporters to send goods including machinery, motor vehicles, and lumber to the U.S. before the tariff increases, alongside a surge in demand for AI-related products, contributed to this growth, the report found. Trade in AI-linked goods such as semiconductors and telecommunications equipment accounted for nearly half of overall trade growth, rising 20% year-on-year. Asia's export performance was particularly strong, the report said. Asia and Africa are expected to see the fastest export volume growth this year, while Europe’s export growth will slow and North America’s is set to decline. All regions are projected to experience weaker import performance in 2026. (Reporting by Olivia Le Poidevin; Editing by Miranda Murray and Emelia Sithole-Matarise)

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