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WTO hikes global trade growth forecast, names Pakistan among nations gaining from disruptions amid ME conflict
ISLAMABAD: The World Trade Organisation on Thursday sharply raised its global trade growth forecast for 2026 — with merchandise trade riding the AI boom — and concluded that some nations, including Pakistan, were actually benefiting from trade disruptions amid the ongoing Middle East conflict in some ways.
In its Global Trade Outlook Update 2026, the Geneva-based global trade watchdog said its economists had upgraded their forecasts for global merchandise trade volume growth to 3.9 per cent for 2026 and 4.1pc for 2027 — up from previous estimates of 1.9pc and 2.6pc, respectively, projected at the start of the US-Iran conflict in March.
The report said that despite the conflict, the global economy had remained resilient, reflecting a stronger-than-expected surge in AI-related capital investment and increased supplies of fuels and fertilisers from countries outside the Middle East.
While several countries faced fuel transport disruptions because of the closure of the Strait of Hormuz, the redistribution of traffic was creating opportunities for various other economies, it said.
“For example, Pakistan’s exports of sea freight transport services rose by 73pc year-on-year in the first half of 2026, as its transport operators benefited from increased traffic,” the WTO said.
Vessel calls at major container terminals in Karachi were still 14pc higher year-on-year in July, it added.
Exports by the United States to the European Union continued to expand while exports to Asia and the Pacific decreased by 2pc in the second quarter.
At the same time, computer services exports by several smaller and emerging players expanded rapidly. In the second quarter, computer services exports from Malaysia rose by 34pc, those from Pakistan by 23pc and by 13pc in Brazil.
The WTO also noted that the rerouting of vessels and containers towards alternative ports and trans-shipment hubs had put pressure on capacity in South Asia, translating into higher charges. In July, the Mediterranean Shipping Company (MSC) introduced a congestion surcharge of $500 per container on shipments from Northern Europe to India, Pakistan, Sri Lanka and Bangladesh.
“Longer waiting and transit times are increasing costs for carriers and traders, some of which may ultimately be passed on to consumers,” it said.
Stronger-than-expected growth reflects opposing forces
The report revised the forecast for commercial services trade volume growth in 2026 down to 3.3pc from the previous 4.8pc, as the conflict in the Middle East has depressed travel and tourism in the region and raised fuel input costs worldwide.
In 2027, growth rates in volume terms for merchandise and commercial services trade were expected to rise to 4.1pc and 6.4pc, respectively, but this outcome depended on a timely resolution of the Middle East conflict, according to the WTO.
Based on these projections, the volume of global goods and services trade was expected to grow by approximately 3.7pc in 2026 and 4.7pc in 2027, the organisation forecast.
The stronger-than-expected growth in merchandise trade reflects two opposing forces, according to the watchdog. On the one hand, the push from AI-related investment has increased demand for AI-enabling goods, which accounted for 47pc of global merchandise trade growth in value terms in the first half of 2026. On the other hand, reduced shipments of oil, natural gas and fertilisers have weighed on merchandise trade; for the ongoing year to date, the former has outweighed the latter, the WTO said.
It noted that while high commodity prices may persist as a result of bottlenecks constraining the flows of fuels and fertilisers, continued AI investment and the broader digitisation of the global economy were expected to keep merchandise trade growth above the rate of global GDP growth in 2027.
“AI investment and the Middle East conflict are also affecting the services trade outlook, but to different degrees. AI is lifting trade in computer and financial services. However, the impact of the conflict in the Middle East is prevailing in traditional services such as transport, tourism and construction,” it said.
Conversely, services trade growth is expected to remain below trend this year before rebounding in 2027. Asia and North America are expected to see their contributions decline, while those of Europe are expected to remain broadly stable, putting the region on track to account for over half of the growth in export services this year.
Meanwhile, the rest of the world was expected to make a negative contribution, dragged down by a large contraction in the Middle East, the report added. All services sub-sectors are expected to see growth below the March baseline forecast.
However, it noted that the trade forecast remains subject to several significant risks.
“The current wedge between crude oil and refined oil prices is weighing on trade growth by eroding households’ purchasing power. A slowdown or reversal of AI investment spending could also have a significant impact on trade given its high import content,” it said.
Turning to trade statistics in value terms, the WTO said the current US dollar value of world merchandise trade had risen considerably faster than volume in the first half of 2026, up 15pc year-on-year compared to 3.5pc growth in volume terms.
“This marks one of the largest gaps between the value and volume of trade growth in recent years, reflecting higher prices for fuels and electronic components for data centres,” it said.
It noted that trade continued to show “some alignment with geopolitical considerations”, although it pointed out that the gap between intra-bloc and inter-bloc trade had narrowed through 2025 and into 2026, suggesting that “the broader pattern of bloc-based fragmentation has not continued to intensify”.
US-China trade decoupling had, however, accelerated since 2025 and was now the main driver of the bloc divergence, it added.
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