Global trade is expected to slow in 2026 amidst strong headwinds and rising protectionism, with profound implications particularly for developing nations like the Philippines. However, opportunities abound in the surging South-South trade, which has emerged as a major engine of global trade, according to the latest Global Trade Update from the United Nations.
A new policy insight on the top trends in global trade this year from the UN Conference Trade and Development (UNCTAD) advises developing nations to gear up for a sluggish year ahead as slower global economic growth is seen to greatly impact trade prospects, investment flows, and policy choices.
UNCTAD estimates global growth to remain subdued at 2.6% in 2025 and 2026 despite potential gains from technologies such as artificial intelligence. Growth in developing economies (excluding China) is expected to ease slightly to 4.2% in 2026, down from 4.3% in 2025, pointing to a volatile external environment.
“Subdued global growth raises the stakes in developing countries by limiting investment and access to finance for infrastructure and industrialization. Policymakers will need to adapt strategies—such as strengthening regional integration or digital trade—to counter global headwinds and build resilient development,” said the report.
One bright spot is the expanding trade between developing economies, largely fueled by Asia’s regional value chains—especially in East and Southeast Asia—where high- and medium-tech manufacturing accounts for roughly half of South-South trade.
The report revealed that between 1995 and 2025, South-South merchandise exports are estimated to have soared from about US$0.5 trillion to $6.8 trillion, far outpacing both South-North trade and overall world trade growth. Today, 57% of developing country exports go to other developing markets, up from 38% in 1995.
Notably, more than half of Africa’s exports now go to other developing countries, reflecting deeper regional integration and the growing role of large emerging economies as import markets. Geopolitical fragmentation could further accelerate this trend, as developing countries increasingly rely on each other to offset weaker demand in advanced economies.
The report called on developing countries to heighten South-South trade, which remains significantly underdeveloped despite strong complementarities. “Strengthening South-South linkages could become a key driver of resilience within global trade networks,” it added.
This regional integration is vital in the face of rising global tariffs in 2025, introduced by the US and driven by increased protectionism. UNCTAD expects governments to continue using tariffs in 2026 to pursue industrial and strategic objectives.
Another significant global trend is the reconfiguration of value chains. Nearly two-thirds of global trade takes place within value chains that are being reshaped by geopolitical tensions, industrial policy and new technologies. Firms are diversifying suppliers and relocating production closer to key markets to reduce risk.
“Countries with strong infrastructure, skills and stable policies are better placed to attract investment. More peripheral economies risk being sidelined unless they improve logistics, skills and the investment climate,” said the report.
Other notable trends include the rising importance of sustainable trade. Environmental commitments are increasingly shaping trade as climate pledges move from ambition to implementation. By late 2025, pledges by 113 countries could cut emissions by about 12% by 2035.
“Carbon pricing, clean-energy markets and environmental standards are redefining competitiveness. Developing countries will need access to green finance, technology and support to stay competitive,” said the report.
Meanwhile, agricultural trade will remain vital for food security in 2026, with food products accounting for nearly 87% of commodity exports. Many developing countries depend on imports to meet basic needs.
“High fertilizer prices and climate shocks continue to threaten supplies. Open trade, better access to inputs and climate-resilient farming are essential to stabilize food systems,” the paper said.
Finally, developing economies can expect to face tighter trade regulations. According to UNCTAD, since 2020, around 18,000 new discriminatory trade measures have been introduced. Technical regulations now affect roughly two-thirds of global trade, raising compliance costs, especially for smaller exporters.
“Environmental, social and security-driven rules will expand further in 2026. Flexible global rules and targeted assistance will be key to ensure inclusive trade,” the paper said.