The World Trade Organization on Thursday raised its forecast for global merchandise trade growth, saying demand for artificial intelligence-related products had helped offset disruption caused by the US-Israeli war on Iran.

The Geneva-based body now expects world goods trade volume to grow 3.9% in 2026, up from the 1.9% projected in its baseline forecast issued in March. For 2027, it sees growth of 4.1%, revised up from 2.6% and slightly below the 4.2% expansion recorded in 2025.

A surge in spending on semiconductors and AI data centres provided a significant boost, the report said, with trade in those products jumping 67% from the previous year.

The outlook for services was weaker. The WTO cut its 2026 forecast for services trade growth to 3.3% from a previous baseline of 4.8%, citing higher jet fuel costs linked to the conflict in the Middle East. Growth projections for this year in transport and travel services, both heavily reliant on the region, were lowered to 0.9% and 0.2% respectively. Services trade growth is expected to rebound to 6.4% in 2027.

Global GDP is forecast to expand 2.6% in 2026, with Asia posting the strongest gains at 4.3%, followed by Africa and South America. The Middle East, by contrast, is expected to see a sharp four percent contraction in output.

The report flagged several risks to the outlook, including weaker household purchasing power as fuel and fertiliser costs rise amid disruption in the Strait of Hormuz, a vital route for global energy supplies, as well as Russia's war in Ukraine and any slowdown in AI investment.