World trade volume growth is projected to slow - IMF

The International Monetary Fund (IMF) has said in its World Economic Outlook (WEO) for October 2026 that world trade volume growth is projected to slow from 5.0 percent in 2025 to 4.6 percent in 2026 and stabilise at 4.7 percent in 2027.

According to the Fund, these dynamics reflect the drag from tariffs alongside the gradual adjustment of trade linkages and production chains through trade reconfiguration and substitution of suppliers, as well as brisk growth in technology-related trade flows.

Global imbalances are projected to decline only modestly over the medium term, the Fund said, adding that this limited narrowing might not materialize and, in recent years, the WEO forecasts for global current account balances have tended to exhibit a downward bias.

Global current account balances increased further in 2025 to about 3.8 percent of world GDP, continuing the upward trend observed since the pandemic and reversing the decline following the global financial crisis.

The widening was driven primarily by a sharp increase in China’s surplus, which increased to about 0.6 percent of world GDP (3.7 percent of China’s GDP), alongside larger surpluses in several Asian economies, whereas the euro area surplus narrowed and oil exporters’ surpluses declined.

At the same time, the United States remained the world’s largest deficit economy, with a current account deficit of about 1.0 percent of world GDP. Early 2026 trade data indicate that global imbalances are expected to increase slightly this year and are projected to remain elevated in 2027, with further increases in trade surpluses in China and other Asian exporters and weaker balances in the United States and the euro area.

Persistent domestic saving-investment distortions in major economies continue to shape global imbalances.

Expansionary fiscal policy in some economies with current account surpluses is expected to contribute to the projected cyclical decline. Partly offsetting this is the surge in technology-driven business investment, which, even as it moderates, is expected to keep attracting capital to the United States and sustain large trade surpluses in several Asian economies. Stronger productivity growth in the United States could enhance US competitiveness in technology-related services and improve the country’s trade balance.

But positive wealth effects would boost domestic demand, complement capital inflows driven by higher returns, and keep the US current account deficit wider than that observed in the decade preceding the COVID-19 pandemic.

Sustained large fiscal deficits in the United States and limited rebalancing to domestic consumption in China contribute to external imbalances in these two countries, which together account for about 40 percent of global current account balances.