current
Elevated Trade Uncertainty
Trade policy uncertainty has reached historically high levels, fueled by geopolitical tensions and inward-looking policies, hindering trade growth.
Timeframe
near-term
Subcategories
Impact areas
Detailed Analysis
Geopolitical fragmentation and a rise in protectionist measures are creating significant headwinds for global trade. The report notes that trade-policy uncertainty has reached this century’s highest level, especially considering years involving major elections. This uncertainty, coupled with the proliferation of trade measures designed to restrain cross-border commercial flows, is contributing to a historically weak trade performance. From 2013 through 2023, investment growth in developing economies more than halved, on average, from the pace of the 2000s. This trend towards trade fragmentation poses a serious threat to global prosperity. The report emphasizes that the model of international cooperation that flourished after the fall of the Berlin Wall, which encouraged the flow of goods, capital, and ideas across borders, has been fracturing. This fracturing is evident in the proliferation of trade restrictions and the rise in trade policy uncertainty. The report warns that without stronger international cooperation and a concerted push for policies that advance shared prosperity, the world could become stuck in the slow lane of economic growth.
Context Signals
Investment growth in developing economies has halved since the 2000s.
Trade policy uncertainty is at its highest level this century.
Trade restrictions are proliferating.
Edge
Businesses may need to diversify supply chains and explore regional trade opportunities to mitigate the risks of global trade fragmentation.
The rise of regional trade blocs could lead to new forms of economic and political alliances.
Digital trade and services may offer alternative avenues for cross-border exchange in a fragmented trade environment.
