Qatar National Bank (QNB) saw that global trade is moving from a stage of accelerated globalization to a more fragmented reality, after a path that extended for an entire generation and graduated from “hyper-globalization” during the first decade of the millennium, through a stage of “slowing globalization” in the second decade, reaching the current scene characterized by more fragmentation and growing policy-related restrictions.
The bank indicated in its weekly report that this transformation did not lead to the dismantling of trade or supply chains, as much as it led to their restructuring, in parallel with the conclusion of new agreements, pointing out that the phase of increasing integration, which was based on clearer rules, is giving way to a commercial environment that is more influenced by strategic and geopolitical considerations.
He considered that these developments had important repercussions on global growth and prices, as well as the development prospects of emerging economies that relied on market openness to enhance their growth and reduce the gap with advanced economies.
He stated that global trade was one of the main drivers of the global economy at the beginning of the twenty-first century, as trade in goods and services quadrupled during the period between 2000 and 2024, while the ratio of trade to global output rose to its peak of about 60 percent in 2008.
According to the report, the global financial crisis represented a major turning point in the course of international trade, as it ended a phase of rapid expansion that is often described as an era of “hyperglobalization,” after which the pace of trade growth began to slow.
In this regard, the report said that since then, momentum has declined, and the global trading system recently entered one of its most turbulent periods in decades, due to a wave of tariffs and trade restrictions.
Understanding this transformation is of great importance, given the role that trade has played as one of the most powerful engines of global economic growth and poverty reduction in the modern era.
In its weekly analysis, Qatar National Bank reviewed three stages in the development of global trade, starting with the rapid expansion during the first decade of the twenty-first century, through the stage of “slowdown in globalization” that followed the global financial crisis, all the way to the recent rise in protectionism, which is currently contributing to reshaping the map of global trade.
In this context, the report monitored an exceptional expansion in global trade integration during the first decade of the twenty-first century, driven by China’s accession to the World Trade Organization in 2001, the spread of global value chains, and the steady decline in trade costs, all of which contributed to facilitating the movement of goods, components, and services across borders at an unprecedented pace.
He pointed out that this expansion was enhanced by other factors, most notably the acceleration in standardization of containers used in the shipping sector, the rapid growth in information technology, in addition to successive rounds of reducing customs duties and liberalizing trade.
He stated that global trade continued to grow during that period at a rate nearly double the growth rate of global output, which raised the ratio of trade to gross domestic product and enhanced the integration of emerging market economies into the global trading system.
He pointed out that the share of emerging markets in total global trade has increased from about a quarter in the early 2000s to about 40 percent currently, which has led to the reshaping of the geographical map of global trade.
As for the second stage, Qatar National Bank considered that the global financial crisis in 2008 represented a turning point in the course of global trade, as it then moved from a phase of rapid expansion to a period characterized by a slowdown in the pace of trade growth.
The report noted that, after the severe contraction that followed the global financial crisis, and then the recovery during 2009 and 2010, trade growth stabilized at a much slower pace, while the ratio of trade growth to global gross product growth declined from about two to one before the crisis to about one to one after it.
He attributed this to the expansion of global value chains reaching maturity, and the trend of major economies, such as China, to enhance their growth through domestic demand.
The bank pointed out that trade openness stabilized during this stage, instead of continuing to rise, which led to the term “globalization slowdown” to describe an era in which trade integration remained significant, but it was no longer increasing at the rapid pace recorded in the previous stage.
As for the third stage, the bank considered it to be the most influential, with the global trading system entering a more tense stage characterized by an increase in protectionism.
According to Global Trade Alert, the number of new trade-restrictive measures applied around the world nearly doubled between the decade ending in 2010 and the decade ending in 2020, rising from about 3,000 measures annually to about 6,000.
The report indicated that the value of imports affected by new tariffs and other import measures rose more than fourfold over the past year, recording the highest level of coverage in more than 15 years of monitoring.
He explained that successive rounds of tariff increases and restrictive measures among major economies, coupled with a broader shift towards industrial policies and reducing supply chain risks, have pushed both tariffs and trade policy uncertainty to levels far above historical norms.
At the conclusion of its analysis, the bank saw that the repercussions of this transformation have begun to be reflected in short-term expectations, explaining that after the volume of global commodity trade grows by about 3 percent in 2024, growth is expected to slow sharply.
In this regard, the World Trade Organization has repeatedly warned that the spread of trade-restrictive measures and policy uncertainty represent the most significant negative risks facing global trade prospects.
The report concluded that trade fragmentation is increasing along geopolitical grounds, with trade exchanges being redirected towards partners seen as more reliable, considering that this process leads to higher costs and reduced efficiency, which imposes pressures on global productivity over time.