Global Services Trade Shows Slowest Growth Since 2023

2025-08-01 economy

Geneva, Friday, 1 August 2025.
In Q1 2025, global services trade growth slowed to 5% due to economic uncertainty and a strong US dollar, contrasting with Asia’s robust 9% growth.

Impact of Economic Uncertainty

The World Trade Organization (WTO) attributes the slowdown in global services trade growth to 5% year-on-year in the first quarter of 2025 to significant economic uncertainties and currency fluctuations. This figure marks a drastic decrease from the 10% growth witnessed in both 2024 and 2023 [1][2]. The appreciation of the US dollar against major currencies like the euro has played a pivotal role in this deceleration, making exports more expensive and less competitive globally [3][4].

Regional Variations in Trade Patterns

While the overall global services trade saw a slump, Asia bucked the trend with a robust 9% growth, driven by impressive performances in countries such as China, India, and Japan, which recorded double-digit growth in their services exports [1][5]. In contrast, Europe and North America experienced subdued growth, posting only a 3% increase in the same period, further highlighting the challenges imposed by economic factors and fluctuating currencies [1][4].

Sectoral Insights

Despite the broader slowdown, certain sectors like computer services and international travel showed resilience. Computer services exports were underpinned by strong global demand for AI, digital transformation, and cybersecurity solutions, resulting in a 13% growth for India and a 9% increase for Ireland [6][7]. Meanwhile, international travel advanced by 5% year-on-year, achieving levels 3% above pre-pandemic 2019 figures, with significant growth recorded in Asian countries [3][7].

Future Outlook and Implications

The ongoing economic uncertainty, influenced by geopolitical tensions and exchange rate volatility, poses potential risks to continued growth in the services trade sector. Analysts caution that unless conditions stabilise, global services trade may persist at lower growth rates into the latter half of 2025 [3][8]. Additionally, the strength of the US dollar could continue to challenge international service providers by increasing the cost of exports [3].

Sources

economic slowdown services trade