Global trade growth is losing momentum, with the first half of the year marking a clear deceleration in international commercial activity. After expanding at close to 4 percent earlier, global trade growth has now eased to an estimated range of 2.5–3 percent. This moderation reflects a broader shift in the global economic cycle, where initial resilience is giving way to mounting structural and cyclical pressures. The outlook suggests that the second half of the year and the medium-term horizon may be defined more by caution than by recovery.

At the beginning of the year, global trade benefited from residual post-pandemic normalization, easing supply chain bottlenecks, and selective demand recovery across manufacturing and commodities. However, these supportive factors are gradually dissipating. Persistent inflationary pressures, restrictive monetary policies, geopolitical fragmentation, and rising policy uncertainty are increasingly constraining both demand and investment decisions. As a result, the pace of global trade expansion is now falling closer to its long-term average, with risks tilted to the downside.

Slowing Growth in Advanced Economies: A Drag on Global Demand

The United States, a cornerstone of global consumption and trade flows, is expected to experience a notable economic slowdown. Growth is projected to moderate to around 1.8 percent in 2025 and further to approximately 1.5 percent in 2026. Elevated interest rates, tighter credit conditions, and cooling consumer demand are dampening economic activity. Business investment is also becoming more cautious as companies reassess capital expenditure plans amid uncertain demand and higher financing costs.

For global trade, this deceleration carries significant implications. Reduced U.S. import demand directly impacts exporters across Asia, Europe, and emerging markets, particularly in sectors such as consumer goods, electronics, engineering products, and intermediate manufacturing inputs. The slowdown in the world’s largest import market reinforces the broader trend of weakening global trade momentum.

China’s Structural Slowdown and Its Global Trade Implications

China’s economy, long a primary engine of global trade growth, is also transitioning into a slower growth phase. Economic expansion is projected to ease from around 5 percent in 2025 to 4.6 percent in 2026, a sharp contrast to the pre-pandemic average growth rate of approximately 6.7 percent. This slowdown is not merely cyclical but increasingly structural in nature.

Challenges such as subdued domestic consumption, stress in the real estate sector, demographic headwinds, and ongoing industrial restructuring are constraining China’s growth potential. As China recalibrates its economic model toward higher value-added production and domestic self-reliance, import demand for certain raw materials, intermediates, and consumer goods is moderating. This shift is already affecting trade-dependent economies across Asia, commodity exporters, and global manufacturing supply chains closely linked to Chinese demand.

Thinning Resilience and Rising Global Trade Risks

Collectively, slower growth in the United States and China is eroding the resilience observed at the start of the year. Global trade is increasingly exposed to a complex risk environment characterized by geopolitical tensions, trade policy fragmentation, supply chain realignments, and weak capital flows. Protectionist tendencies and strategic trade interventions are adding further friction to cross-border commerce.

While some segments—such as energy transition technologies, critical minerals, pharmaceuticals, and select high-technology supply chains—continue to demonstrate relative strength, these pockets of growth are insufficient to offset the broader slowdown. The result is a more uneven and fragile trade landscape, where performance varies widely across regions and sectors.

Strategic Implications for Exporters and Global Businesses

In this evolving environment, the focus for exporters and international businesses must shift from expansion-led strategies to resilience-driven growth. Market diversification, supply chain optimization, disciplined risk management, and a stronger emphasis on compliance and value addition will be critical. Companies that rely heavily on a limited set of markets or products face heightened exposure to demand shocks and policy changes.

At the same time, businesses that invest in trade intelligence, flexible sourcing strategies, and structured financing solutions will be better positioned to navigate volatility. As global growth moderates, competitiveness will be determined not by scale alone, but by adaptability, efficiency, and strategic foresight.

Outlook: Navigating a More Cautious Trade Cycle

The current slowdown does not yet signal a sharp contraction in global trade, but it does point to a prolonged phase of subdued and uneven growth. With macroeconomic buffers thinning across major economies, the margin for error is narrowing. Global trade participants must prepare for a cycle defined by uncertainty, selective opportunities, and heightened risk sensitivity.

At Entellus International Private Limited, we continue to closely track global economic and trade developments, supporting businesses with informed market intelligence, diversified sourcing strategies, and structured international trade solutions to navigate this evolving global landscape with confidence.