WTO Projects 0.2% Decline in Global Merchandise Trade for 2025

Current Context: The World Trade Organization (WTO) has projected a 0.2% decline in global merchandise trade volume for 2025, as outlined in its Global Trade Outlook and Statistics report released on April 16, 2025.

• This marks a significant shift from the earlier forecast of 2.7% growth, largely attributed to rising tariffs and trade tensions, particularly between the US and China.

Key Insights:

• Tariff Impact: Reciprocal tariffs imposed by the US and China are expected to further reduce trade growth by 0.6%, with broader policy uncertainty potentially leading to a 1.5% decline.
• Regional Effects: North America is forecasted to experience a steep drop in exports (12.6%) and imports (9.6%).
• Services Trade: While not directly subject to tariffs, global commercial services trade growth is revised down to 4%.
• Economic Outlook: WTO economists predict global GDP growth at 2.2% in 2025, down by 0.6 percentage points from earlier estimates.

Question:

Q.1 According to the WTO's April 2025 report, what is the projected change in global merchandise trade volume for 2025?
a) Increase by 2.7%
b) Decline by 0.2%
c) Increase by 0.2%
d) Decline by 1.5%

Answer: b) The WTO revised its global merchandise trade volume forecast for 2025 from a 2.7% growth to a 0.2% decline, due to rising tariffs and trade tensions.