• Introduction

  Global services exports lost momentum in Q1‑2025 as per the WTO report. Europe and North America grew just +3% y/y, while Asia held up at +9%, with the drag coming mainly from “Other commercial services” (OCS). A broad, mostly digitally deliverable bucket that made up ~60% of global services trade in 2024 and where Europe supplies ~40% of exports.

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  Deep dive: what fell, where, and by how much

  1) The core drag: “Other commercial services”

  • Why it matters: OCS spans professional/technical, trade‑related, R&D, financial, IP‑related, and many digital services—the largest and most dynamic slice of services trade. Its slowdown explains most of the Q1 deceleration.
  • Numbers: In the US, “other business services” growth slowed to +4% y/y (from +8% a year earlier). The EU was flat in USD terms (but +4% in EUR, highlighting FX effects). Financial services exports in Q1 rose only +3% y/y globally; EU and US were +2%, Switzerland −3%. IP‑related services cooled to +4% (from +7%).
    
    

  2) Sectors that bucked the trend

  • Computer services were “only marginally affected” as AI, digital transformation, and cybersecurity kept demand firm. India’s computer services exports rose +13%, Ireland +9%.
  • Transport: +3% globally; Asia +10% led by China +31%. Travel: +5% globally; Asia +13% (China +96%, Viet Nam +33%, Japan +25%, Thailand +18%). North America’s travel receipts −1%.
    
    

  3) Construction slump

  Global construction exports −15% y/y, retracing part of 2024’s surge. China −25% (it held ~28% of global construction exports in 2024), Korea −15%, EU −6% which reflects delayed investment amid uncertainty and rising costs.
  
  

  4) Regional scoreboard (early‑2025)

  • Europe & North America: +3% y/y exports in Q1; the UK stood out at +10%, including +13% to the US.
  • Asia: +9% in Q1; monthly data (Jan–May/Jun) show China +13%, India +12%, Japan +11%. US +5%, Canada −6%; EU extra‑EU exports +3%, imports +6%; UK exports +9%, imports +13%. 

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India snapshot (what’s driving resilience)

• Computers/IT services: +13% in Q1‑2025 for computer services specifically; broader services exports (Jan–May) +12%. This aligns with Indian firms’ focus on AI enablement, cloud migration, cybersecurity, and platform engineering for global clients. 
• Spillovers: Strong Asian transport and travel flows support ancillary Indian services (GCCs, design/R&D, aviation services, e‑commerce logistics).

What digital services (and AI) mean for future trade trends

1) Growth outlook still led by digital

WTO’s adjusted April‑2025 outlook projects commercial services export volumes +4.0% in 2025 and +4.1% in 2026 (down from a 5%‑ish baseline). Within that, “Other commercial services” +5.3% in 2025 and digitally delivered services +5.6% in 2025 which, still is the most resilient segment. Regionally, Europe ~+5.0%, Asia ~+4.4%, North America ~+1.6% in 2025 (volume terms). 

2) AI as a demand engine

Three durable AI‑linked demand streams:

• Modernization at scale: Cloud re‑platforming, data engineering, app modernization, and AIOps create recurring exports in consulting, implementation, and managed services.
• Cybersecurity and trust: Model security, data governance, and compliance‑as‑a‑service expand cross‑border demand for digital risk services.
• IP‑heavy offerings: GenAI accelerates software, media, and IP licensing; despite potential policy frictions, this supports IP‑related and SaaS exports as enterprises embed AI across functions. (WTO notes that IP licensing rules and uncertainty can modulate these flows, but digitally delivered services remain the least‑affected among services sectors.) 

3) Policy & FX will shape the scoreboard

• FX effects: The EU’s Q1 softness in USD terms but +4% in EUR shows currency can mask real momentum in dollar‑denominated snapshots.
• Goods–services linkage: Tariff shocks to goods spill into transport and broader B2B services demand; WTO projects transport +0.5% (volume) in 2025 under the adjusted scenario, vs +2.9% baseline.
• Rules for digital trade: Cross‑border data provisions, trust frameworks, and IP regimes (incl. AI‑generated outputs) will influence digitally delivered services growth paths.

4) India: where to lean in

• High‑value digital exports: GenAI platforms, cybersecurity, data/ML engineering, vertical SaaS, and product‑adjacent managed services.
• GCC (Global Capability Center) depth: Move up the value chain into R&D, design, and product engineering to capture IP‑related revenue, not just time‑and‑materials IT.
• Services‑for‑goods tailwinds: As manufacturers diversify supply chains into India, expect pull‑through demand for logistics IT, embedded software, testing, and engineering services.

Numbers you can use (Q1‑2025 and YTD)

• Europe & North America services exports: +3% y/y (Q1). Asia: +9%. OCS = ~60% of global services; Europe ~40% of OCS exports.
• US “other business services”: +4% (vs +8% a year ago). EU: 0% (USD), +4% (EUR). Financial services: +3% global; EU/US +2%, Switzerland −3%. IP‑related: +4% (vs +7%).
• Computer services: resilient; India +13%, Ireland +9%. Transport: +3% global; Asia +10%, China +31%. Travel: +5% global; Asia +13% (China +96%, etc.). 
• Forecast (volumes, adj. scenario): World services +4.0% (2025); digitally delivered +5.6% (2025); OCS +5.3% (2025); Europe +5.0%, Asia +4.4%, North America +1.6%.

Conclusion

The Q1‑2025 slowdown is not a collapse; it’s a rotation. Traditional OCS sub‑sectors (business, financial, IP) cooled, but computer and AI‑linked services stayed buoyant. With digitally delivered services projected to outgrow the services aggregate again in 2025, exporters—especially India—should double down on AI‑driven, IP‑rich, compliance‑heavy offerings while watching FX, tariff spillovers, and evolving digital‑trade rules.