QNB confirmed that the beginning of 2025 was accompanied by cautiously positive expectations for global trade growth, supported by relative stability in the world economy. However, new shifts in US trade policy have significantly affected the global economic landscape. The bank's weekly report noted that the decision of the United States on Apr. 2 to impose broad tariffs including duties of no less than 10 percent on imports and higher rates on selected countries has led to rising concerns about supply chain disruptions, increased uncertainty, and the potential escalation of trade disputes. The report stated that, as a result, the World Trade Organization (WTO) has forecast a contraction in global trade volumes for the current year, an occurrence that is rare and typically seen only in exceptional circumstances such as the 2009 global financial crisis and the 2020 COVID-19 pandemic. The report explained that economic indicators since April 2025 have shown notable resilience in the global economy despite existing challenges. It projected that global trade growth in 2025 will be modest compared to previous periods, but will remain far beyond the most pessimistic scenarios. This outlook is supported by three main factors. The first factor highlighted in the report is that leading indicators, particularly from highly integrated Asian economies such as Japan, South Korea, Singapore, Taiwan, and Vietnam, reflect strong export activity, signaling a recovery in global trade. These markets recorded an average annual growth rate of 6 percent in 2024, with the rate accelerating to 12 percent in the last four months of the year despite trade tensions. The report also pointed to Chinese export growth of 6 percent during the same period, reflecting sustained global demand. In this context, the report stated that investor expectations regarding the earnings of transportation-sector companies serve as an important indicator of future global trade trends. The Dow Jones Transportation Average in the United States, which includes companies involved in air, land, and sea transport as well as rail and delivery services, reached its lowest annual growth level in mid-2024 before rebounding into positive territory, signaling a possible expansion of trade.This improvement reflects a decline in pessimism even amid continued trade shocks. The gap between strong Asian export growth and the more cautious profit expectations of transport companies was attributed to the increase in early shipments to the US market in anticipation of further tariff threats. The second factor concerns a significant decrease in the likelihood of large-scale global trade wars despite the rise of US protectionist policies. The report explained that the conclusion of US negotiations with key trading partners, including the United Kingdom, Japan, and the European Union, has clearly reduced uncertainty and lowered the probability of expanding tariff measures. At the same time, most global economies are moving toward greater trade integration through multilateral agreements, which reduces the negative impact of protectionist policies and strengthens the stability of the global trading system. The third factor relates to monetary policy. The report considered that waves of monetary easing adopted by major central banks are expected to provide additional support for global trade growth in the coming period. It noted that the US Federal Reserve is expected to cut its benchmark interest rate by 125 basis points next year, bringing it down to 3.25 percent by the end of 2026, in an effort to reduce borrowing costs and stimulate economic activity. Similarly, the European Central Bank has lowered its key rate by 200 basis points since mid-2024 to settle at 2 percent.The report emphasized that interest rates are a decisive factor in supporting investment and boosting consumer spending, which are two key pillars of global trade, particularly given that the United States and the euro area together account for about 40 percent of global GDP. The bank concluded its report by affirming that the outlook for 2025 indicates a tangible improvement in the prospects for global trade compared to the more pessimistic scenarios that followed Washington's announcement of broad tariffs. It pointed out that a combination of positive economic indicators, accommodative monetary policies, and the signing of new trade agreements is helping to limit the repercussions of geopolitical and economic tensions and to support the stability of the global trading system in the upcoming period.
