WTO hikes global trade growth forecast, names Pakistan among nations gaining from disruptions amid ME conflict

WTO hikes global trade expansion forecast, names Pakistan among nations gaining from disruptions against the backdrop of ME conflict.

Key points

• Khaleeq Kiani Published October 8, 2026 Updated October 8, 2026 10: 43pm.
• In July, the Mediterranean Shipping Firm (MSC) introduced a congestion surcharge of $500 per container on shipments from Northern Europe to India, Pakistan, Sri Lanka and Bangladesh.
• Exports by the United States to the European Union continued to expand while exports to Asia and the Pacific fell by 2pc in the second quarter.
• Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and throughout the world.
• Vessel calls at major container terminals in Karachi were still 14pc higher year-on-year in July, it continued.

Khaleeq Kiani Published October 8, 2026 Updated October 8, 2026 10: 43pm. Join our Whatsapp Channel.

ISLAMABAD: The World Trade Organisation on Thursday sharply raised its global trade expansion forecast for 2026 – with merchandise trade riding the AI boom – and concluded that some nations, including Pakistan, were actually benefiting from trade disruptions against the backdrop of the ongoing Middle East conflict in some ways.

In its Global Trade Outlook Update 2026, the Geneva-based global trade watchdog remarked its economists had upgraded their forecasts for global merchandise trade volume expansion 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.

According to the report, despite the conflict, the global economy had remained resilient, reflecting a stronger-than-expected surge in AI-related capital investment and climbed supplies of fuels and fertilisers from countries outside the Middle East.

While a number of countries faced fuel transport disruptions as of the closure of the Strait of Hormuz, the redistribution of traffic was creating opportunities for various other economies, it noted.

"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 remarked.

Meanwhile, computer services exports by a number of 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.

According to The WTO additionally, 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 Firm (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 remarked. Stronger-than-expected expansion reflects opposing forces.

As the conflict in the Middle East has depressed travel and tourism in the region and raised fuel input costs worldwide, the report revised the forecast for commercial services trade volume expansion in 2026 down to 3.3pc from the previous 4.8pc.

In 2027, expansion rates in volume terms for merchandise and commercial services trade were anticipated 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 projected to grow by approximately 3.7pc in 2026 and 4.7pc in 2027, the organisation forecast.

For context, the stronger-than-expected expansion in merchandise trade reflects two opposing forces, according to the watchdog. On the one hand, the push from AI-related investment has rose demand for AI-enabling goods. It accounted for 47pc of global merchandise trade expansion in value terms in the first half of 2026. By contrast, 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 remarked.

It observed that while high commodity costs may persist since of bottlenecks constraining the flows of fuels and fertilisers, continued AI investment and the broader digitisation of the global economy were anticipated to keep merchandise trade expansion above the rate of global GDP expansion in 2027.

"AI investment and the Middle East conflict are additionally affecting the services trade outlook, but to different degrees. AI is lifting trade in computer and financial services. Nevertheless, the impact of the conflict in the Middle East is prevailing in traditional services such as transport, tourism and construction, " it stated.

Conversely, services trade expansion is anticipated to remain below trend this year before rebounding in 2027. While those of Europe are anticipated to remain broadly stable, putting the region on track to account for over half of the expansion in export services this year, asia and North America are projected to see their contributions decline.

Meanwhile, the rest of the world was projected to produce a negative contribution, dragged down by a sizeable contraction in the Middle East, the report went on. All services sub-sectors are projected to see expansion below the March baseline forecast.

Nevertheless, it observed that the trade forecast remains subject to a number of significant risks.

"The current wedge between crude oil and refined oil rates is weighing on trade expansion by eroding households' purchasing power. A slowdown or reversal of AI investment spending could additionally have a significant impact on trade given its high import content, " it stated.

Turning to trade statistics in value terms, the WTO remarked 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 expansion 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 remarked.

Although it observed 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", it observed that trade continued to show "some alignment with geopolitical considerations".

US-China trade decoupling had, nevertheless, accelerated since 2025 and was now the main driver of the bloc divergence, it went on.

Khaleeq Kiani is an Islamabad-based reporter for Dawn, specializing in political economy, governance, business, finance, macroeconomics and energy. He can be discovered on X at @khaleeqkiani.

For now, WTO hikes global trade growth forecast, names Pakistan among nations gaining from remains the part of the story worth watching, and further updates are likely as more details are confirmed.