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The Middle East conflict and its resulting impact on higher logistics costs and inflation will weigh down global trade this year, according to the United Nations Trade and Development’s latest report
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Developing economies that have less financial flexibility will bear the bigger brunt of the economic and trade slowdown
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This year’s outlook comes after global trade reached US$35 trillion in 2025, up by $2 trillion from the previous year
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Much of the 2025 growth in terms of goods and services was driven by developing regions, particularly in East Asia and Africa, as well as strong South–South trade
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UNCTAD said that in the face of current volatility, it is crucial that economies maintain open and predictable trade conditions, and deepen cooperation to ensure that developing countries do not fall further behind
The Middle East conflict and its resulting impact on higher logistics costs and inflation will weigh down global trade this year with developing economies that have less financial flexibility bearing the bigger brunt, the United Nations Trade and Development (UNCTAD) said in its latest Global Trade Update.
“Despite robust global trade growth in 2025, rising geopolitical tensions and disruptions to key shipping routes are increasing risks across the global economy, with implications for developing economies,” UNCTAD said in its April report.
Global trade reached US$35 trillion in 2025, up by $2 trillion from the previous year.
For this year, “the outlook is becoming increasingly uncertain,” UNCTAD said with still no clear path towards resolving the crisis in the Middle East and the resulting closure of the Strait of Hormuz, a key maritime lane for global oil supply.
READ: Air, ocean freight continues to be choked by Middle East crisis
“For many developing economies, these disruptions translate into higher import bills, tighter financial conditions and reduced capacity to sustain growth and development, although some emerging economies continue to show resilient demand and support global trade flows,” the UN agency said.
Much of the 2025 growth in terms of goods and services was driven by developing regions, particularly in East Asia and Africa, as well as strong South–South trade.
This reflects the increasing role of developing economies as engines of global trade. However, uneven participation means that many countries still struggle to fully benefit from these gains, UNCTAD noted.
Trade in goods drove most of the expansion, growing by about 7% and adding roughly $1.8 trillion to global growth.
Services also grew by around 8%, contributing about $700 billion to the total increase.
Meanwhile, as the United States-China trade continue to decouple, new “connector economies” are emerging, helping sustain global trade flows despite rising fragmentation.
This means opportunities for both local and foreign investments, and join international value chains.
Manufacturing, particularly in electronics and technology-related goods, has been a key driver of global trade growth. However, other sectors such as the automotive industry remain subdued amid rising protectionism.
UNCTAD said that in the face of volatility, it is crucial that economies maintain open and predictable trade conditions, and deepen cooperation to ensure that developing countries do not fall further behind.
READ: Sluggish global economic growth seen to hold back trade in 2026—UNCTAD
