WTO Sharply Downgrades Global Trade Outlook: Concerns Over Declining U.S. Economic Growth Rate in 2025

WTO's Dramatic Downward Revision of Global Trade Forecast



The World Trade Organization (WTO) has significantly downgraded its global trade forecast. As shown in the graph above, the WTO now projects that global merchandise trade volume will decrease by 0.2% in 2025. This represents a substantial downward revision from their previous forecast of 3.0% growth.

Looking at the graph in detail, the blue bars represent actual merchandise trade volumes, while the red bars indicate forecasts. Global trade saw a sharp decline of approximately -5% in 2020 due to the COVID-19 pandemic, followed by a strong rebound of about 8% in 2021. Trade maintained growth of around 2.5% in 2022 but returned to negative growth in 2023.

For 2024, a recovery of approximately 2.5% was expected, but for 2025, as indicated by "Down from 2.7% growth," the forecast has been dramatically revised from the initially expected 2.7% growth to -0.2%. For 2026, marked as "Down from 2.9%," while downgraded from the previous 2.9% forecast, a recovery of about 2.5% is anticipated.

IMF-World Bank Spring Meetings and Global Economic Outlook

This downward revision of the WTO's trade forecast comes ahead of the IMF-World Bank Spring Meetings scheduled to take place in Washington DC next week. This meeting will bring together hundreds of policymakers and experts, and will feature the publication of the IMF's widely-followed World Economic Outlook (WEO) with country-level projections for growth, inflation, debt, and other economic indicators.

The current market consensus expects largely negative revisions. Of particular note is the anticipated downward revision of the IMF's January projection of 2.7% growth for the U.S. in 2025. A critical point of interest will be the IMF's assessment of how sensitive the rest of the world will be to this decline in U.S. economic growth.

Key Causes of Global Trade Contraction

According to the WTO's revised outlook, the 0.2% decrease in global merchandise trade volume in 2025 is expected to mark the steepest decline since the COVID-19 pandemic. The main factors driving this decline are identified as U.S. tariff policies and global trade tensions.

Economist Mohamed A. El-Erian highlighted the importance of the IMF-World Bank Spring Meetings (April 21-26, 2025, in Washington, D.C.), noting that the IMF's World Economic Outlook (WEO) is likely to revise the U.S. economic growth rate for 2025 downward from 2.7%, which could significantly impact global economic projections.

Future Outlook and Concerns

According to WTO data, a trade volume recovery of 2.5% is expected in 2026. However, El-Erian mentioned uncertainty about how the IMF will assess global sensitivity to changes in the U.S. economy, expressing concerns about a potentially deeper recession.

J.P. Morgan Research (2025) suggests that if the U.S. economic slowdown proves more severe than expected, it could put additional pressure on global supply chains, particularly impacting emerging market countries with high export dependencies.

Implications

The WTO's downward revision of its forecast indicates that the global economy remains in an unstable state, and particularly highlights how changes in U.S. economic policy can significantly impact world trade. Investors and businesses should pay close attention to the outcomes of the upcoming IMF-World Bank Spring Meetings, especially the IMF's World Economic Outlook (WEO) announcement.

The projected decline in U.S. economic growth and its ripple effects on the global economy will likely serve as important variables in formulating future investment strategies and business plans.

Source: Mohamed A. El-Erian Twitter

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