AI Investment and Middle East Conflict to Shape Global Trade in 2026
The global trade outlook for 2026 is poised to be heavily influenced by two major factors: investment in artificial intelligence (AI) and the ongoing conflict in the Middle East. According to the World Trade Organisation (WTO) Secretariat's latest Global Trade Outlook and Statistics 2026 report, these elements will play critical roles in shaping trade dynamics, presenting both opportunities and challenges for economies worldwide.
Resilient Trade Growth in 2025
In 2025, world merchandise trade volumes expanded by an impressive 4.6 per cent, nearly double the growth anticipated a year earlier. This robust performance was largely driven by the AI surge, which fueled booming investment in data centres, processors, semiconductor equipment, and other AI-enabling products. Despite accounting for only one-sixth of total merchandise trade, these goods contributed almost half of the global trade growth in 2025.
Asia emerged as the primary engine of this growth, singlehandedly contributing 71 per cent of total merchandise trade expansion. Key players such as China, Singapore, Chinese Taipei, and Thailand delivered especially strong results. Meanwhile, North America experienced robust imports early in the year, partly due to frontloading of imports ahead of anticipated tariff hikes.
Services Trade and Post-Pandemic Normalisation
Services trade continued its post-pandemic normalisation in 2025. While travel growth moderated as pent-up demand eased, digitally delivered services and other commercial services maintained strong and steady growth. This shift underscores the increasing importance of digital infrastructure and AI-driven services in the global economy.
Projections for 2026 and 2027
The WTO report presents a baseline scenario for trade growth, projecting slower merchandise trade expansion of 1.9 per cent in 2026, followed by a modest pickup to 2.6 per cent in 2027. Services trade is expected to grow somewhat faster, with an expansion of 4.8 per cent in 2026, rising to 5.1 per cent in 2027. However, these forecasts are subject to significant uncertainty due to persistent high oil prices and the durability of the AI boom.
Impact of the Middle East Conflict
The ongoing conflict in the Middle East poses substantial risks to global trade. If high oil prices persist throughout 2026, the report estimates that world merchandise trade growth could fall by 0.5 percentage points, dropping from 1.9 per cent to around 1.4 per cent. Services trade, particularly in transport and travel, would be even more exposed, with growth potentially dipping to 4.1 per cent from the baseline projection of 4.8 per cent. This decline is attributed to cancelled flights, disrupted shipping routes, and higher insurance costs in the region.
AI Investment as a Counterbalance
On the other hand, AI-related spending has continued to exceed expectations in early 2026. If this momentum persists and demand for AI-enabling goods remains at 2025 levels throughout the year, global merchandise trade growth could add 0.5 percentage points, potentially offsetting much of the energy-related drag caused by the Middle East conflict. The report highlights that the share of AI-enabling goods in world trade rose from around 13 per cent in 2023 to nearly 17 per cent by the end of 2025, with trade in these products growing by 21.9 per cent year-on-year in 2025.
Structural Shifts in Global Trade
Beyond short-term shocks, several structural shifts continue to reshape global trade. The increasing integration of AI technologies into various sectors is driving a fundamental transformation, with high-tech goods and digitally delivered services becoming more central to trade flows. The WTO report underscores the need for policymakers and businesses to adapt to these evolving dynamics to harness opportunities and mitigate risks in the coming years.
