World trade is navigating a period of significant disruption, yet data shows continued growth driven by AI demand despite wars and protectionist trade policies.
Key facts
- •Goods trade volumes rose 4.6% last year, while services trade grew by 5.3%.
- •China remains the world's largest goods exporter, with the US as the largest importer.
- •The EU reduced its reliance on Russian pipeline gas from 37% in 2021 to about 10%.
- •US imports from China declined by approximately 28% last year.
- •WTO economists estimate that trade fragmentation could reduce global GDP by 5% by 2050.
Global trade is experiencing its most unpredictable era in 80 years due to the COVID-19 pandemic, ongoing conflicts in Ukraine and the Middle East, and US trade policies. Despite these challenges, the World Trade Organization reports that goods trade volumes grew by 4.6% last year, supported by demand for artificial intelligence technology. While globalization appears to have stalled, trade has not yet shifted into reverse.
By the numbers
Trade Resilience and AI Growth
The WTO's annual report indicates that AI-related technology accounted for approximately one-sixth of goods trade and nearly half of global trade growth last year. Services trade also saw a 5.3% increase. However, WTO chief economist Robert Staiger noted that this AI-driven activity might be masking broader declines in world trade. Geographically, Asian nations currently dominate the AI goods sector, while Africa, Latin America, the Middle East, and much of Europe show limited participation.
Shifting Alliances and Energy Markets
Geopolitical conflicts have forced significant shifts in energy supply chains. Since the invasion of Ukraine in 2022, the European Union reduced its reliance on Russian pipeline gas from 37% to approximately 10%, pivoting to suppliers like the US, Norway, Australia, and Kazakhstan. Meanwhile, the conflict in Iran led to the closure of the Strait of Hormuz, prompting global producers to increase output and nations to tap into strategic oil reserves to stabilize supply.
Impact of Protectionist Policies
US trade policy under President Donald Trump has increasingly bypassed WTO rules in favor of country-specific duties. While 72% of goods are still traded under WTO terms, this is a decrease from 80% in 2022. US imports from China fell by 28% last year, with trade rerouted toward countries like Vietnam, Taiwan, and Mexico. Economists warn that further fragmentation of trade along geopolitical lines could reduce global GDP by 5% to 7% by 2050.
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This article was independently rewritten by ManyPress editorial AI from reporting originally published by Deutsche Welle Business.
