TWN Info Service on WTO and Trade Issues (Jan26/08)
23 January 2026
Third World Network

UN: UNCTAD flags ten defining trends as global trade faces crossroads
Published in SUNS #10363 dated 19 January 2026

Penang, 16 Jan (Kanaga Raja) — Global trade is heading into 2026 amid a convergence of pressures – from weakening global growth and deepening geopolitical fragmentation to the rapid pace of digital and green transitions and increasingly restrictive national regulations, UN Trade and Development (UNCTAD) said on 15 January.

Together, these forces are reshaping trade flows, investment decisions and global value chains, with the greatest risks and opportunities concentrated in developing economies, it added.

In its first Global Trade Update for this year, UNCTAD highlights ten key trends that will define how countries trade in 2026 and how trade policy choices could either reinforce fragmentation or support more resilient and inclusive growth.

KEY TRENDS FOR 2026

The ten key trends highlighted by UNCTAD in its report are as follows:

1. Global growth slows, weighing on developing economies

Global economic growth in 2026 will moderate trade prospects, investment flows, and policy choices, said the report.

UNCTAD estimates global growth will remain subdued at 2.6 per cent in 2025 and 2026, despite potential gains from technologies such as artificial intelligence.

Growth in developing economies (excluding China) is expected to ease slightly to 4.2 per cent in 2026, down from 4.3 per cent in 2025, pointing to a volatile external environment.

According to the report, major economies will also lose momentum. The United States growth is projected at 1.5 per cent in 2026, down from 1.8 per cent in 2025, while China – an essential trade and investment partner for many developing countries – is expected to expand by 4.6 per cent in 2026, down from 5 per cent in 2025.

In Europe, fiscal stimulus in countries like Germany may offer limited support, but overall demand will remain modest.

The report noted that slower growth affects trade through weaker export demand, tighter financial conditions, and greater exposure to shocks.

“Commodity-dependent economies may face heightened price volatility, while access to external finance could become more constrained. Globally, policy volatility may further dampen long-term investment, complicating infrastructure and industrial financing for developing countries.”

The impact on developing countries will be significant. Subdued global growth raises the stakes in developing countries by limiting investment and access to finance for infrastructure and industrialization, said the report.

Policymakers will need to adapt strategies – such as strengthening regional integration or digital trade – to counter global headwinds and build resilient development plans toward 2026, it suggested.

2. Trade rule reform reaches a crossroads

The 14th WTO Ministerial Conference (MC14) will take place in Yaounde, Cameroon, against a backdrop of geopolitical tensions and trade uncertainties driven by unilateral tariffs, bilateral deals, and economic security concerns, said the report.

For developing countries, addressing systemic challenges remains a priority, particularly reforming the dispute settlement mechanism and restoring a fully-functioning Appellate Body. These reforms are essential to safeguard market access and ensure developing members can effectively uphold their rights within the multilateral trading system, it stressed.

Preserving policy space and reinforcing Special and Differential Treatment (SDT) will also be central concerns, it said, adding that SDT provisions are critical for industrialization, value addition, and structural transformation, enabling developing countries to maximize the benefits of global trade.

According to the report, developing countries’ interests span several areas, including agriculture and fisheries, with an emphasis on food security and rural livelihoods; electronic commerce, covering regulatory approaches that support digital development strategies, cross-border data flows, emerging services trade models, and the future of the e-commerce moratorium; and the potential integration of the plurilateral Investment Facilitation for Development Agreement (IFDA) into the WTO legal framework.

Deliverables at MC14 will shape the trajectory of WTO reform and global trade governance. For developing countries, this is a pivotal moment to influence reforms that address contemporary economic challenges and opportunities while also fostering inclusive growth, said the report.

3. Rising tariffs fuel trade uncertainty

In 2026, governments are expected to continue using tariffs as protectionist and strategic tools. Their role in regulating market access expanded markedly in 2025, led by the United States’ tariff increases tied to industrial, geoeconomic, and geopolitical objectives, the report said, adding that as a result, average global tariffs rose, with uneven effects across sectors and trading partners.

It said uncertainty is likely to persist in 2026 as governments pursue a variety of domestic policy objectives using tariffs and other trade policy instruments, including industry support, intensifying industrial policies, addressing trade imbalances, and adjustments to supply-chain reorganization and technological change within existing and new trade agreements.

The report said tariffs shape trade flows by increasing import costs, and even small increases can ripple across markets by weakening demand, shifting sourcing, and re-routing trade.

Frequent policy changes amplify uncertainty, discouraging investment and complicating planning. Trade volumes may fall not only after tariffs rise, but also as firms adjust preemptively to expected policy shifts. A volatile tariff environment, therefore, risks undermining global trade growth and efficiency, it added.

The report cautioned that smaller, less diversified economies are particularly exposed to rising tariffs and policy volatility. Limited capacity to redirect exports or absorb higher costs can lead to revenue losses, fiscal strain, and slower development. Tariff hikes on commodities may also threaten livelihoods and food security.

4. Value chains reconfigure as geopolitics reshape trade and investment maps

Global value chains are shifting. Recent shocks are reshaping production networks as trade tensions and the COVID-19 pandemic pushed firms beyond cost-driven off-shoring and towards risk-aware strategies, said the report.

“This re-configuration is expected to continue in 2026, driven by geopolitical strains, new industrial and climate policies, and technological change.”

Firms are diversifying suppliers, “near-shoring” production closer to consumers, and vertically integrating to secure key inputs. Advances in automation and artificial intelligence are also reducing labour-cost advantages, encouraging production relocation.

Structural shifts are altering trade patterns. Nearly two-thirds of global trade occurs within global value chains, and changes in their configuration are creating new hubs and routes, the report noted.

Some hub countries – key locations where value chain activities are concentrated – and routes through which goods and services move – are expanding faster than average, while others decline.

The report said although supplier diversification can strengthen resilience and thus stabilize trade, it may also introduce inefficiencies and weigh on trade growth.

In this context, UNCTAD said developing economies face both opportunities and risks. Countries with strong infrastructure, skilled labour, and stable long-term policies are better positioned to attract investment as firms seek new locations.

On the other hand, it said that peripheral economies – especially those reliant on low-cost labour exports – risk marginalization if production concentrates in a few hubs.

Proactive measures, including improved logistics, workforce upgrading, and a stronger investment climate, are essential to remain integrated into global value chains, it suggested.

5. Services drive trade growth, widening digital gaps

Over the past decade, world services exports expanded by about 5.3 per cent annually – more than twice the pace of goods trade – and now account for 27 per cent of global trade, said the report.

In 2025, services export growth is expected to reach 9 per cent, with momentum likely to continue in 2026. This reflects growing servicification, as services increasingly underpin production across sectors.

By 2022, services made up 71 per cent of global intermediate inputs, including sizeable shares in primary industries (about 18 per cent) and manufacturing (about 31 per cent).

Access to efficient services such as finance, logistics, and information technology, often through imports, has become essential for competitiveness.

Advances in digital technology have made many services tradable at scale. Digitally deliverable services now represent 56 per cent of global services exports, having grown at an average annual rate of 7.1 per cent over the past decade.

However, the report said that a pronounced digital divide remains: in developed economies, about 61 per cent of services exports are delivered digitally, compared with just 16 per cent in least developed countries (LDCs). At the same time, new barriers are emerging, with the global digital services trade restrictiveness index rising from 0.168 in 2014 to 0.182 in 2024.

Digital services increasingly feature prominently in bilateral and regional trade agreements, such as the AfCFTA Digital Trade Protocol with its 9 Annexes (adopted in 2025, going for ratification by African countries in 2026), recent bilateral deals between the United States and some Asian countries, and ongoing negotiations toward the ASEAN Digital Economy Framework Agreement (DEFA).

Looking ahead, the report said ministerial decisions on electronic commerce and digital transactions at the WTO MC14 may carry significant implications for global strategies aimed at advancing servicification and integrating value chains, as well as for the capacity of developing countries to effectively participate in these activities.

6. South-South trade surges as developing countries drive export growth

According to the report, South-South trade is emerging as a major engine of global trade. Between 1995 and 2025, South-South merchandise exports are estimated to have soared from about $0.5 trillion to $6.8 trillion, far outpacing both South-North trade and overall world trade growth.

Today, 57 per cent of developing country exports go to other developing markets, up from 38 per cent in 1995.

This surge has been fueled largely by Asia’s regional value chains – especially in East and Southeast Asia – where high- and medium-tech manufacturing accounts for roughly half of South-South trade, said the report.

“South-South trade across regions is on the rise. More than half of Africa’s exports now go to other developing countries, reflecting deeper regional integration and the growing role of large emerging economies as import markets.”

Geopolitical fragmentation could further accelerate this trend, as developing countries increasingly rely on each other to offset weaker demand in advanced economies, it added.

Strengthening South-South linkages could become a key driver of resilience within global trade networks, the report suggested.

7. Environmental concerns remain a key part of global trade initiatives

The report noted that in 2026, international agreements on oceans, biodiversity, fisheries subsidies, and water resources are taking effect, with implications for embedding environmental governance into trade and economic planning.

In 2026, the European Union Carbon Border Adjustment Mechanism will become fully operational, imposing a carbon price on selected imports and, from 2028, on specific steel and aluminium-intensive downstream goods, it said.

8. Critical minerals face volatility amid oversupply and geopolitical risks

Critical mineral markets enter 2026 after a sharp price correction from their 2021-2022 highs. By late 2025, prices of key minerals essential for clean energy technologies were 18-39 per cent below peak levels, despite notable short-term volatility, said the report.

It said while cobalt prices rebounded strongly in 2025, this increase was largely driven by temporary supply disruptions and export restrictions in the Democratic Republic of Congo, amplified by low inventories and precautionary restocking, rather than by sustained recovery in underlying demand.

Overall, the price decline since 2022 reflects rapid supply expansion, slower-than-expected battery demand, and technological shifts that reduce mineral intensity. These trends are expected to continue in 2026, it suggested.

It also said lower prices have eased cost pressures for electric vehicles and renewable energy producers, but also risk discouraging new mining projects in 2026.

In 2024, investment spending grew by only 5 per cent compared to 14 per cent in 2023 and 30 per cent in 2022.

“Entering 2026, critical-minerals investment remains constrained, with policy-driven funding in the European Union and the United States partially offsetting weak market incentives. Financing is expected to recover only modestly and remain focused on near-mine projects rather than new greenfield development.”

UNCTAD said despite lower prices, supply risks persist. Export controls and licensing regimes have intensified, including the Democratic Republic of Congo’s cobalt export ban in February 2025 (followed by the introduction of export quotas) and China’s controls on seven heavy rare earths and high-performance permanent magnets. Such measures can tighten supply abruptly, even in a low-price environment.

It said the cobalt episode also signals that some resource-rich countries may increasingly use export restrictions in 2026 to manage market conditions, though adoption is likely to be selective and mineral-specific given fiscal and investment tradeoffs.

“Import-dependent countries are responding through stockpiling and bilateral agreements to secure access to upstream and processing capacity, potentially increasing supply-chain fragmentation and reducing efficiency in 2026.”

Resource security will remain a strategic trade issue, as governments intervene to protect critical mineral supply chains. Despite moderating prices, competition over critical mineral supplies is intensifying and is expected to continue in 2026, said the report.

9. Agricultural trade remains vital for food security

Agricultural trade will continue to underpin food security. Food and agricultural products represent around one- third of commodity exports, with food products making up nearly 87 per cent, the report emphasized.

It said many developing countries depend on food imports to meet basic needs, making open and predictable trade essential. At the same time, agricultural exports support livelihoods and incomes for millions of farmers and rural workers.

However, it said that agricultural markets remain highly vulnerable to shocks. In recent years, conflicts, trade restrictions, and extreme weather have disrupted food and fertilizer supplies. Droughts, floods, and storms are becoming more frequent, reducing yields and triggering local shortages.

It said that these shocks keep food prices volatile. Fertilizer markets have been especially volatile, with prices of nitrogenated and phosphate fertilizers surging in 2025 and remaining high, raising production costs for farmers around the world. Developing countries are particularly exposed, as many lack the fiscal and policy buffers to absorb price spikes.

Keeping global food trade open is a lifeline for vulnerable economies. When domestic harvests fall short, imports can prevent severe shortages. At the same time, strengthening domestic agriculture is critical to reduce excessive reliance on imports.

It said this requires better access to inputs such as seeds, fertilizer, and machinery; improved rural infrastructure; greater access to finance; and wider adoption of climate-resilient farming practices.

Many low-income countries, however, face low agricultural yields and remain highly dependent on food imports, highlighting the need for international support to boost food security.

Monitoring food commodity markets and providing early warnings will remain key, allowing policymakers to manage import bills, diversify production, and avert food crises while advancing sustainable development, the report suggested.

Increasingly, these priorities overlap with financial stability issues, as financialization of commodity markets is reshaping the agriculture sector, often creating new risks, it said.

10. Trade regulations tighten as national policies reshape commerce

The report said trade-distorting measures are on the rise. Governments are increasingly using trade measures to pursue domestic goals in areas like security, industry, public health, and the environment.

Since 2020, around 18,000 new discriminatory trade measures have been recorded globally, marking a sharp protectionist turn.

Today, technical regulations and sanitary standards affect roughly two-thirds of world trade, covering trade worth US$2.6 trillion.

Major powers are also promoting their own standards abroad, potentially creating rival regulatory blocs that force smaller countries to choose sides.

In addition, trade policy is being applied to climate and social objectives – for example, carbon border taxes and import barriers linked to deforestation or labour practices.

These initiatives address important goals but add new compliance burdens for exporters, said the report.

It said in 2026, the use of non-tariff measures (NTMs) will expand, driven by environmental, social and security priorities alongside persistent protectionist pressures.

While affecting global trade, their impact will fall unevenly, as smaller exporters and lower-income economies face rising procedural and compliance costs. More flexible global rules and targeted technical assistance will be essential to ensure inclusive implementation, it concluded. +