While global trade maintains a fragile momentum in early 2026, UNCTAD (United Nations Conference on Trade and Development) forecasts a significant slowdown in the latter half of the year.
Persistent trade tensions, rising operational costs, and intensifying geopolitical conflicts are expected to dampen the strong performance seen throughout 2025.
The global economy continues to navigate a complex landscape of limited fiscal space and shifting policies. UNCTAD identifies several critical factors currently clouding the trade outlook:
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Geopolitical Instability: Ongoing conflict in the Middle East and shipping disruptions in the Strait of Hormuz are expected to exacerbate inflationary pressures.
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Rising Costs: Higher energy prices and increased trade costs—driven by new tariffs, regulatory shifts, and the erosion of traditional multilateral trade rules—are weighing on market sentiment.
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Shifting Sector Dynamics: While the automotive sector remains subdued under the weight of rising protectionism and energy trade stays volatile, high-tech sectors continue to offer a silver lining.
Despite the broader slowdown, global demand for AI-related goods, digital technologies, and green-industry products remains a primary engine of growth. This trend, which fueled much of the manufacturing expansion in 2025, is expected to persist through 2026, sustaining the overall performance of international trade.
A defining feature of the current trade landscape is the sharp contraction in direct trade between the United States and China, which plummeted by approximately $170 billion (roughly 25%) in 2025.
However, the global trade system has proven remarkably adaptive. New “connector economies” have emerged as vital intermediaries. Nations such as Cambodia, Egypt, Vietnam, and Indonesia are now serving as essential logistical hubs and assembly points. These economies are effectively stabilizing global flows and cushioning the impact of geopolitical fragmentation.
Preliminary data for early 2026 suggests that the robust goods trade of the previous year has carried over into the first quarter. However, UNCTAD warns of emerging signs of a slowdown in the services sector and emphasizes that the current positive trend remains highly vulnerable to external shocks.
“The emergence of connector economies demonstrates the resilience of global supply chains,” the report notes. “However, the combination of rising trade costs and geopolitical volatility creates a precarious environment for sustained global growth in the coming quarters.”
