Services trade growth slows in first quarter of 2025

 

Global services trade growth slowed in the first quarter of 2025 to 5% year-on-year, roughly half the pace recorded in both 2024 and 2023. The appreciation of the US dollar against the euro and other currencies, coupled with increased economic uncertainty, contributed to the slowdown in services trade in the early months of the year.

Services exports in Europe and North America increased by only 3% year-on-year in the first quarter of 2025, down from 8% and 11% respectively in the first quarter of 2024. In contrast, strong growth was sustained in Asia at 9%.

The overall slowdown in services trade was mainly due to “Other commercial services,” a category that encompasses a wide variety of mostly digitally deliverable services ranging from financial to professional services (Chart 1). In 2024, “Other commercial services” accounted for some 60% of global services trade, with Europe contributing 40% of those exports (Chart 2).

Chart 3 shows a deceleration across selected subsectors of “Other commercial services” in the first quarter of 2025 compared with the same period of 2024. Growth in “Other business services,” covering various professional, technical and trade-related services, as well as research and development services, moderated. The United States posted a subdued 4% year-on-year increase in “Other business services” following an 8% expansion in the same period of 2024. Exports by the European Union remained flat in US dollar terms, although they rose by 4% when measured in euros.

Financial services exports grew by only 3% year-on-year in the first quarter of 2025, reflecting reduced investment activity amid increased global economic uncertainty. The sector was also affected by exchange rate movements, which dampened US dollar-denominated growth. Exports from both the European Union and the United States rose just 2% year-on-year while Switzerland's exports fell by 3%. The United Kingdom, on the contrary, posted a robust 10% year-on-year increase sustained by double digit growth in exports to the United States (+13%).

Intellectual property related services expanded by 4% year-on-year in the first three months of 2025 in comparison with a 7% growth in the same quarter of 2024. Global trade in IP-related services remains highly concentrated, with the European Union and the United States accounting for nearly 70% of exports in 2024. EU exports, measured in US dollars, rose by just 3% year-on-year, held back by exchange rate volatility, despite stronger underlying growth of 6% in euro terms.

Global construction exports fell by 15% year-on-year in the first quarter of 2025, reversing part of the strong 25% growth recorded during the same period in 2024. The decline reflects weaker performance across several key economies, including China (-25%), which alone accounted for over 28% of global construction exports in 2024, the Republic of Korea (-15%), and the European Union (-6%). The downturn in the first quarter likely reflects delayed investment due to uncertainty and rising costs.

Computer services exports were only marginally affected by the broader slowdown, as strong global demand for artificial intelligence (AI), digital transformation, and cybersecurity solutions continued to drive growth. This momentum is expected to persist, supported by ongoing business adaptation to new technologies and rising consumer preferences for digital services. During the period, India’s computer services exports grew by 13%, while Ireland recorded a 9% increase.

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