Is AI powering a global trade boom?

Leanna Byrne (0:01)

AI is keeping global trade growing, so says the World Trade Organization, its World Business Express from the BBC World Service. I'm Leanna Byrne. France is grappling with its finances and why holidayers who booked a cruise got stuck on buses instead.

The World Trade Organization says uncertainty over investment in AI is more of a risk to the global trade outlook than the ongoing conflict in the Middle East. Its latest forecast have more than doubled its predicted trade growth this year, and says the boom in artificial intelligence is largely behind that surprisingly strong performance. I've been speaking to the WTO's Chief Economist Robert Steiger.

Robert Steiger (0:42)

The AI investment boom has really dominated the growth in merchandise trade this year and overcame headwinds that were caused by the Middle East conflict.

Leanna Byrne (0:54)

Does that leave global trade dangerously reliant on a handful of big tech companies that continue to spend billions on AI? What happens if that investment slows?

Robert Steiger (1:04)

When we did our initial forecast for 2026 back in March, we were looking at the AI boom that happened in 2025, and it was a dramatic increase in AI investment. And we expected that the investment would tend to moderate a little bit in 2026 And in fact, what we find in the first half of 2026 is that investment boom actually accelerated. So it's a very, very strong force for trade growth. So one might worry that, well, two possibilities. One is, will that growth finally start to moderate, and will we not see such growth in 2027?

And we're finding in our leading indicators that we look at that there's no real sign that that growth is going to diminish. But there's also another possible issue that you're raising, and that is the growth in AI enabling goods trade is fairly narrowly defined across regions. Asia and North America are the two big regions that are involved in this kind of trade.

And in fact, the 10 economies that do the most trade and AI enabling goods account for almost 85% of that trade. And so it is a growth in global trade driver, but it is not a growth in all regions' trade driver.

Leanna Byrne (2:27)

And Europe is missing out quite a bit. So is there a danger that this creates a lasting divide?

Robert Steiger (2:32)

Europe is not nearly as involved in this AI boom as North America and Asia. Interestingly, for Europe, we have to remember that the Middle East conflict is an important part of our forecast for 2026

And the Middle East conflict does dominate in trade and services. Europe actually has done very well. We expect them to do very well in service trade in 2026

And partly, our downgrade in overall global service trade growth reflects the effects of the Middle East conflict.

Leanna Byrne (3:04)

If you had to choose one, what would worry the most about outlook for global trade next year?

Robert Steiger (3:09)

The thing that seems most of the driver is really the AI boom. For merchandise trade, which is the majority of trade, the world economy has proven to be fairly resilient in being able to respond to the kind of shocks that occurred with the closure of this trade of hormones. That's why I think the main risk to the continued forecast is more the question of whether the real juggernaut of trade right now, which is the global AI boom, continues.

Leanna Byrne (3:41)

That was WTO Chief Economist Robert Steger there. Two of Asia's biggest chipmakers have delivered bumper results fueled by that AI boom. Samsung is on course for its most profitable quarter ever, and Taiwan's TSMC has reported second quarterly revenue. Nicholas Hyatt is lead alternative analyst at Hargreaves Lansdowne. Nicholas, those are extraordinary numbers from both companies, so explain to me why the share price is down.

Nicholas Hyatt (4:06)

Well, I think the thing to bear in mind is while Samsung and TSMC have said that demand is likely to continue into next year, and they're agreeing long-term contracts with customers to try and lock in those prices, the big worry is about what happens at the back end of 2027 and onwards, where the demand that we're seeing at the moment is sustained and that keeps prices high and also profits high.

Leanna Byrne (4:28)

Now, I also see Brent Crew, that's the International Benchmark for Oil Prices. It's up again. So what's behind that rise?

Nicholas Hyatt (4:35)

Well, last month, oil was flowing through the Straits pretty well, at around 15 million barrels a day, which was 90% of the pre-war level. But that fell to just 4 million on Tuesday, and we've seen more attacks on tankers in the Gulf and off the coast of Oman yesterday. So the real worry is that that supply of oil is going to dry up, and that's going to affect global supply and global prices.