AI Investment Reshapes Global Trade: Asia's Exports Surge 20% While Middle East Logistics Falter

Global merchandise trade value grew 11% year-on-year in Q1 2026, but this headline masks stark regional disparities: Asia's exports surged 20%, while the Middle East saw import and export volumes plunge over 9%. A joint WTO-UNCTAD report reveals that AI industry investment has become a core variable reshaping global trade flows, while geopolitical conflicts continue to tear regional supply chains.

Regional Divergence Beneath the Data

On a volume basis, global merchandise trade rose 1.9% quarter-on-quarter and 3.2% year-on-year, while trade value climbed 2% quarter-on-quarter and 11% year-on-year. Given the high base set by North America's tariff-driven front-loading in Q1 2025, this growth shows notable resilience. Yet regional performance varies sharply: Asia's import and export volumes jumped 14.6% and 12.9% respectively, while the Middle East saw imports fall 9.7% and exports drop 11.9%, making it the biggest drag globally.

North America's export volume rose 7%, but imports plunged 10.7%, signaling clear domestic demand contraction. Europe showed a pattern of weak exports and slightly firm imports, with export volume down 2.6% and manufacturing orders soft. South America, Africa, and the CIS saw mixed short-term export trends, with CIS down 7.4% quarter-on-quarter. Yet South America's cumulative export growth since early 2023 stands at 22.5%, second only to Asia in long-term potential.

AI Investment as Asia's New Engine

Asia's strong performance is not driven by a single market. China, South Korea, Singapore, Thailand, and Taiwan have all seen export growth, fueled by cross-border demand for AI chips, smart hardware, and supporting equipment. In value terms, Asia's exports surged 20% year-on-year, leading globally, while imports rose 22%, also the fastest. South Korea's export value grew 38.4%, followed by Hong Kong at 38.3%, with the US and China up 15.2% and 14.7% respectively.

The essence of this growth is AI investment reshaping the commodity structure. For traditional sectors like textiles, this implies demand for electronic-related fabrics and functional materials may be boosted, while order flows for general categories are being redefined by regional divergence. Buyers and exporters must recognize that Asia's prosperity is not broad-based but concentrated in specific supply chains.

Middle East Risks and Energy Export Regions Under Pressure

Geopolitical conflict remains the core negative variable. The Middle East's import and export volumes both fell, with institutions predicting further pressure in Q2. Energy-exporting regions saw export values dip 1% for the Middle East and CIS, while Africa and South America rose 14%. Industry expects oil producers to ramp up output to fill the Middle East gap, likely boosting exports from South America, Africa, and CIS in Q2.

For textile exporters reliant on the Middle East, this means higher logistics and settlement risks, necessitating contingency plans. Meanwhile, Africa's cumulative import growth of 25% (highest globally) and South America's 24.5% highlight emerging markets as worthwhile expansion targets.

Practical Recommendations

For Buyers - Monitor demand for electronic-related fabrics (e.g., conductive cloth, anti-static materials) tied to Asia's electronics chain, and secure suppliers early. - Add risk clauses to Middle East orders, using letters of credit or export credit insurance to mitigate logistics disruptions. - Leverage North America's import contraction to renegotiate prices and payment terms with local clients.

For Exporters - Shift market development focus toward Africa and South America, building local distribution channels to capitalize on their import growth. - Develop differentiated products for AI hardware packaging and accessories to capture high-growth niches. - Track energy exporters' production resumption in Q2 and lock in procurement plans with South American and CIS clients early.