Macroscope | The trouble with ‘de-risking’ is that the world needs to make trade, not war
- In the 1930s, the world descended into depression, multilateral trade suffered, regional blocs became protectionist and international tensions rose
- Could the global economy be heading for tumultuous times again, as a US-led group of nations seeks to decouple, or ‘de-risk’, from dependence on China?
If you want to know where the global economy and stock prices are going from here, don’t look at gross domestic product numbers or market indices, look at what’s happening to world trade. You might then wish to look the other way because the immediate outlook is, to quote one international trade body, “bleak”.
Trade is the biggest single contributor to global GDP and economic growth. However, “the outlook for global trade in the second half of 2023 is pessimistic, as negative factors dominate the positive”, the UN’s trade body, Unctad, said in its latest Global Trade Update.
As a result, we face further discriminatory trade, economic sanctions, declining prosperity or even real wars unless we get better leadership and a willingness to engage in dialogue rather than plot and propagandise. The name of the game has changed from “free” trade to “weaponised” trade.