The complexity of sending and receiving goods across borders is increasing, leading to a greater need for risk management in trade. Global trade is expected to grow at a slower rate than GDP, with familiar trade patterns shifting due to various factors such as the Ukraine conflict and Western nations’ decreasing reliance on China trade. The anticipated changes will dilute economic globalization and trade opening, and corporations are diversifying their trading relationships to reduce risks. The military conflict in Ukraine has had significant economic impacts, leading to trade gaps that the EU and Russia are looking to fill elsewhere. The US and EU are taking measures to lessen their trade dependence on China. The trade map is evolving with relationships coalescing around an East versus West dynamic and the potential emergence of a third bloc. Certain industries, such as energy and those with global supply chains, will face challenges and may need to improve resilience and reduce reliance on China manufacturing. Overall, companies should prioritize supply chain resilience and global diversification in the face of ongoing challenges in global trade.
| Signal | Change | 10y horizon | Driving force |
|---|---|---|---|
| Complexity of global trade | Increasing attention to risk management in trade | Companies will prioritize supply chain resilience and global diversification | Complexity of global trade and steep penalties for missteps |
| Global trade slowing | Shift from trade-led global growth to slower growth | Familiar trade patterns will shift, and economic blocs will rise | Ukraine conflict, decreasing reliance on China trade, diversifying supply chain risks |
| World trade growth rate | Growth rate of 2.3% per year through 2031 | Trade growth will be slower than global economic growth | Changing geopolitical and economic dynamics |
| Shift in trade relationships | Diversification of trading relationships to reduce risks | Corporations will diversify trading relationships to reduce risks | Rising trade tensions and economic nationalism |
| Impact of Ukraine conflict | EU and Russia seek new trade partners | EU will increase trade with the US, Russia’s trade with China and India will grow | Military conflict in Ukraine |
| Efforts to diversify supply chains | US and EU reduce trade dependence on China | US and EU will promote domestic manufacturing and encourage diversification | US government efforts, EU’s China-wary stance |
| Rise in commerce between northern and southern regions | ASEAN countries benefit from new commerce | ASEAN countries will see increased trade with China, Japan, US, and EU | Slowing Western trade with Russia and China |
| Emergence of new trade relationships | East versus West dynamic and a third bloc | New trade relationships will coalesce between US-EU, China-Russia, and a third bloc | Changing trade dynamics and relationship breakups |
| Disruptions in certain industries | Energy, semiconductors, automobiles, consumer electronics | Industries will face transformations and reduce reliance on China manufacturing | West’s phasing out of Russian oil, pressure to improve sustainability |
| Demand for balance between efficiency and global risks | Need for balance between efficiency and risk mitigation | Companies will prioritize efficiency and risk mitigation in trade | Uncertain trade environment and global risks |
| Prioritizing supply chain resilience and diversification | Companies adapting to evolving global economic situation | Companies will prioritize supply chain resilience and global diversification | Protectionism, pandemic, and war challenging global trade |