GENEVA :Artificial intelligence could boost the value of trade in goods and services by nearly 40 per cent by 2040, but without adequate policies it could also exacerbate economic divides, a new World Trade Organization report warned on Wednesday.

Lower trade costs and enhanced productivity could drive substantial increases in trade and GDP by 2040, with global trade projected to rise by 34-37 per cent under various scenarios, according to the WTO's World Trade Report.

Global GDP could also increase by 12-13 per cent, it said.

"AI could be a bright spot for trade in an increasingly complex trading environment," said the Deputy Director General of the WTO, Johanna Hill, commenting on the annual report that analyses trends in the multilateral trading system.

Acknowledging current turbulence in the world trading system, Hill noted that AI was reshaping the future of the global economy and international trade, with the potential to reduce trade costs and boost productivity.

Global trade rules, governed by the Geneva-based watchdog, have faced major disruption this year following a slew of tariffs by U.S. President Donald Trump's administration.

The report highlighted how businesses could reduce costs in logistics, regulatory compliance and communications.

"AI-driven translation technologies can make communication faster and more cost-effective, particularly benefiting small producers and retailers by enabling them to expand into global markets," the report said.

Such advancements could help increase export growth in low-income countries by as much as 11 per cent, provided they improved their digital infrastructure.

However, the report cautioned that without targeted investment and inclusive policies, AI could deepen existing divides.

"The effects of the development and deployment of AI are raising concerns that many workers, and even entire economies, could be left behind," the report said.

To ensure the benefits of AI were shared widely, predictable trade supported by WTO rules and lower tariffs on raw materials essential for AI technologies, including semiconductors, were crucial, it added.

AI set to transform global trade, says World Trade Organization report