00:00Trade in global goods outpaced expectations in the first half of the year, according to the World Trade Organization.
00:07In response, it raised the growth forecast from August 0.9% to 2.4%.
00:14Officials say there's been a surge in United States imports before anticipated tariff rises and an increase in AI-related products.
00:23In the first half of the year, goods used in artificial intelligence like semiconductors, servers and telecoms equipment grew 20% on 2024, counting for nearly half of that trade growth.
00:37Other digital elements also boosted trade.
00:40But looking ahead to 2026, it's a gloomier picture.
00:44The WTO has revised down its initial forecast of 1.8% in trade growth to 0.5%.
00:52Economists expect U.S. tariffs and counter-tariffs to take full effect.
00:59Let's talk to Joanna Hill, who is the Deputy Director General of the WTO.
01:03Great to have you on Global Business Europe.
01:06Let's start with those positives.
01:08And what has lifted world trade so far this year?
01:11It's all about AI, isn't it?
01:14Well, world trade really has shown to be resilient.
01:18We have seen three effects this year.
01:21First, as you mentioned, we have seen front-loading of imports into the U.S. market.
01:27We have also seen trade-related goods in AI have picked up this year very strongly.
01:34These have to do with servers.
01:35They have to do with telecom equipment, semiconductors.
01:39And this has really contributed almost half to this growth that we're seeing this year.
01:45And thirdly, and very importantly, South-South trade has really picked up also.
01:51So the rest of the world is continuing to trade.
01:54I think that back-of-the-envelope calculations that we have done, because usually we do it as regional groups,
02:00but back-of-the-envelope calculations, South-South trade for the first half of the year
02:05has been around 8% in terms of volume, well above the 6% of the rest of the world.
02:13So in terms of where that global growth is coming from, is it the same picture from China to the United States?
02:20Well, we have seen that in that case the bilateral trade has gone down.
02:24Okay. But there is uncertainty ahead, isn't there, in terms of looking ahead to 2026.
02:31So what are the things that are pointing to that slowdown in trade growth?
02:37Yes, we see trade policy uncertainty hitting next year in terms of uncertainty of tariffs.
02:45Also, trade policy, more generally, if it's going to spread the uncertainty to other countries,
02:52may be having more trade restrictions. That's on the downside.
02:56But there's also uncertainty on the upside.
03:00Will there be more growth in trade, AI-related goods trade?
03:06Will we also see other trade with other regions picking up?
03:10So we see uncertainty both in the upside and the downside.
03:15Okay. And what's going on in Europe?
03:19Well, we have seen Europe participating very actively here in the World Trade Organization.
03:24They have also seen their trade picking up.
03:27And we see the perspectives for the next year, for the whole world, as I said, coming down to a 0.5%.
03:36You also have quite subdued forecasts for the global south.
03:42Even you said that there was an increase in south-to-south trade.
03:44So what's going on there?
03:47Well, as you said, the trade policy uncertainty, we see that affecting worldwide trade in goods.
03:53And we also see affecting services.
03:56Services trade has been the sector that has been growing the most over merchandise trade and agriculture.
04:03But even services trade is being affected.
04:05We see the forecast for this year growth at 4.5% versus more than 6% last year.
04:13And we see that coming even down a bit more to 4.4% of next year.
04:18This is because some services are related to goods trade.
04:21We're talking about logistics, talking about transportation, but also in travel, for example.
04:26And so we see the world economy that might be affected by these uncertainties.
04:33Joanna Hill, Deputy Director General of the World Trade Organization.
04:37Great speaking to you.
