Every economic forecast is ultimately an attempt to bring order to an increasingly disorderly world. Today's forecasters must simultaneously assess geopolitical conflicts, shifting trade policies, evolving supply chains, monetary policy, energy markets and, increasingly, the economic impact of technological breakthroughs that have few historical precedents. It is therefore hardly surprising that recent years have repeatedly reminded us just how difficult that task has become. The economy the forecasts struggle to explain is not one that has invalidated traditional economic models, but one that is evolving faster than many established relationships can fully capture. The global economy entered the second half of 2026 under the weight of significant headwinds. The conflict in the Middle East has disrupted energy markets and key trade routes, inflation remains above target in many economies, geopolitical fragmentation continues to reshape global commerce, while elevated uncertainty continues to influence investment and business confidence. Under such conditions, forecasting becomes less about identifying risks and more about assessing the balance between forces pulling the global economy in opposite directions
In this respect, the latest assessments from the International Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO) present a remarkably consistent picture. All recognise that the global economy is slowing from last year's pace, all highlight the risks associated with higher energy prices and geopolitical tensions, and all acknowledge that international trade is entering a more complex environment. Where they differ is not in their diagnosis of the risks, but in how they assess the economy's ability to adapt. The IMF projects global GDP growth of 3.0 percent in 2026 before improving modestly to 3.4 percent in 2027. While the Fund expects the conflict in the Middle East to weigh on activity through higher energy prices, supply disruptions and increased uncertainty, it also argues that these headwinds are being partially offset by an exceptionally strong technology cycle. Accelerating investment in artificial intelligence, semiconductors and digital infrastructure continues to support industrial production, exports and capital expenditure, particularly across economies that are deeply integrated into global technology supply chains. As a result, the global economy is becoming increasingly uneven, with technology exporters and energy producers outperforming, while many energy-importing and lower-income economies continue to face a considerably more challenging environment. The World Bank reaches broadly the same conclusion, although with a more cautious outlook. It expects global growth to slow to 2.5 percent in 2026, the weakest pace since the pandemic, before gradually recovering over the following two years. According to the Bank, higher energy prices, tighter financial conditions, elevated inflation and weaker domestic demand continue to constrain activity, particularly among energyimporting emerging economies. At the same time, however, resilient global trade, continued investment linked to artificial intelligence and a modest improvement in the trade policy environment have prevented a significantly sharper slowdown than earlier anticipated. Taken together, these forecasts illustrate the complexity of the current economic cycle. Traditional macroeconomic headwinds remain firmly in place, yet they coexist with structural forces that are proving more supportive than many would have expected only a few years ago. Artificial intelligence has evolved beyond being simply another technology sector. It is increasingly shaping investment decisions, manufacturing activity, industrial production and crossborder trade, creating new sources of growth that partially offset more conventional economic weaknesses. This complexity becomes even more apparent when examining global trade.
Both the IMF and the World Bank expect international trade to moderate following the exceptionally strong expansion recorded in 2025. The IMF projects world trade volume growth slowing from 5.0 percent to 3.5 percent in 2026 before recovering to 4.3 percent in 2027, while the World Bank expects goods and services trade growth to ease from 4.8 percent to 2.9 percent this year before gradually strengthening as geopolitical uncertainty eases and global demand stabilises. These projections reflect the fading effects of front-loaded imports, higher transport and energy costs, tariffs and the continuing adjustment of global supply chains. Yet forecasting trade has become particularly difficult because global supply chains have repeatedly demonstrated an extraordinary ability to adapt. Cargoes are rerouted, sourcing patterns evolve, inventories adjust and businesses respond to changing economic incentives far more rapidly than was once assumed. While geopolitical disruptions undoubtedly impose costs on global commerce, they do not necessarily translate into proportionate declines in trade volumes. Instead, they often reshape the geography of trade rather than eliminate it altogether.
The latest figures released this week by the World Trade Organization provide a good illustration of this adjustment process. World merchandise trade volumes expanded by 3.2 percent year-on-year during the first quarter of 2026, outperforming the WTO's previous baseline expectations. A key driver has been the continued expansion of trade in AI-related products. The value of global trade in AIenabling goods increased by more than 40 percent during the quarter, reflecting exceptionally strong demand for semiconductors, electronic components and digital infrastructure. This strength more than compensated for the initial disruption to trade flows through the Strait of Hormuz and the weaker performance recorded across the Middle East. Regional developments reinforce this picture. Asia continues to lead global trade growth, supported by expanding semiconductor production and strong intra-regional trade in electronic components. North America has remained relatively resilient despite weaker imports following last year's front-loading of purchases, while trade across the Middle East has inevitably been affected by disruptions to oil, LNG and fertilizer exports. Nevertheless, the WTO also notes that the full effects of these disruptions are only likely to become evident in subsequent quarters, reminding us that trade data often reflect events with a considerable lag.
Perhaps this is the central challenge facing today's forecasters. Traditional macroeconomic models are well equipped to assess the impact of inflation, interest rates, commodity prices and geopolitical shocks. What is inherently more difficult to quantify is the speed with which businesses adapt, supply chains reorganise and entirely new investment cycles generate additional demand. For the dry bulk shipping market, these developments remain broadly constructive. Shipping ultimately responds to physical cargo movements rather than economic sentiment, making freight markets one of the earliest indicators of underlying trade activity. So far this year, commodity demand has remained resilient despite elevated uncertainty, while industrial activity across much of Asia has continued to support seaborne trade. The performance of the dry bulk market therefore appears broadly consistent with the more resilient trade environment reflected in recent WTO data and remains comfortably within the upper range of the broader macroeconomic outlook presented by the IMF and the World Bank.
The defining feature of the current economic cycle is not the absence of risk, but the economy's remarkable ability to adapt to it. Traditional drivers of growth – energy prices, monetary policy and trade barriers – remain as important as ever, yet they increasingly coexist with powerful structural forces such as artificial intelligence, industrial policy and the remarkable adaptability of global supply chains. Forecasting has therefore become an exercise in balancing risks that are well understood against opportunities that are still unfolding. As the latest assessments from the IMF, World Bank and WTO collectively demonstrate, the challenge is no longer identifying the risks facing the global economy, but judging which forces will ultimately prove stronger. For shipping, whose performance is determined by the movement of physical cargoes rather than expectations alone, the evidence from the first half of the year remains encouraging. Global trade has continued to adapt, and dry bulk markets have so far reflected that resilience.
Data source: Doric