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POLICY AND ECONOMIC REPORT
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2. AI to boost trade by nearly 40% by 2040- World Trade Report 2025
The 2025 edition of the World Trade Report reveals that, with the right enabling policies, artificial
intelligence (AI) could boost the value of cross-border flows of goods and services by nearly 40% by 2040
thanks to productivity gains and lower trade costs.

According to the report, AI could lead to significant increases in trade and GDP by 2040, with global trade
projected to rise by 34-37% across different scenarios based on different degrees of policy and
technological catch-up between low-, middle- and high-income economies. Global GDP could meanwhile
see a 12-13% increase across different scenarios. Trade, in turn, can be a powerful enabler of inclusive AI
-supported growth by helping economies access AI-enabling goods, such as raw materials,
semiconductors and intermediate inputs. The WTO report estimates that global trade in these goods
totaled USD 2.3 trillion in 2023.

In a scenario in which low- and middle-income economies narrow their digital infrastructure gap with
high-income economies by 50% and adopt AI more widely, these economies are projected to see incomes
rising by 15% and 14% respectively.

The report also points to the need for open and predictable trade policies, noting that the number of
quantitative restrictions applied to AI-related goods has climbed sharply over time, from 130 in 2012 to
nearly 500 in 2024, driven by high- and upper middle-income economies. Access to AI-enabling goods
remains uneven, with bound tariffs reaching up to 45% in some low-income economies.

Investing in education and training and deploying appropriate labour market policies can help avoid a
widening of inequality within economies, the report adds.

The report emphasizes the role of the WTO in helping to deliver inclusive access to AI and its benefits. The
organization provides a forum for WTO members to discuss AI-related trade measures, the report notes,
highlighting that 80 specific trade concerns raised at the WTO have focused on AI. Dedicated discussions
on AI and inclusive trade have also taken place in the context of the Work Programme on E-Commerce.

3. U.S. Federal Reserve cuts interest rate by 0.25 points
The Federal Reserve cut its key interest rate by a quarter point in September and projected it would do so
twice more this year as concern grows at the central bank about the health of the nation’s labour market.

The move is the Fed’s first cut since December and lowered its short-term rate to about 4.1%, down from
4.3%. Federal officials, led by Chair Jerome Powell, had kept their rate unchanged this year as they
evaluated the impact of tariffs, tighter immigration enforcement, and other Trump administration policies
on inflation and the economy. Lower interest rates could reduce borrowing costs for mortgages, car loans,
and business loans and boost growth and hiring.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the
longer run. In assessing the appropriate stance of monetary policy, the Committee will continue to
monitor the implications of incoming information for the economic outlook. The Committee would be
prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the
attainment of the Committee's goals. The Committee's assessments will consider a wide range of

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