A new report by German logistics firm DHL has highlighted the stability of global trade amid increasing geopolitical tension.
In its annual 'Global Connectedness Tracker’, the firm suggests that the impact of geopolitical rivalries on the value of global trade is overstated, and that on key metrics such as trade in goods and investment, there’s been “surprising” stability.
The report also highlights that smaller trading nations, beyond China, the US and their allies, have grown their share of world trade.
Global picture
The report notes greater opportunities for globalisation. On a scale of 0%, meaning that “no flows cross national borders”, to 100%, where “borders and distance have ceased to matter, and flows are as likely to happen between countries as within them”, the world currently operates at about 25%.
“Even after decades of globalisation, we are still much closer to a world of separate countries than a completely globalised world.”
However, amid increased geopolitical tension, including major conflicts, a year of governmental changes and disruptions to supply chains, a number of metrics tracking international flows of good, investment and information have remained stable.
The report suggests this indicates the value of interconnectedness to countries worldwide, as well as the high cost of deglobalisation “not only for economic growth but also for other priorities such as combatting climate change, curbing inflation, and boosting economic resilience”.
Trade resilience
The report also notes that, in 2023, 21% of the value of all goods and services produced was traded internationally, which sits just below the record high of 22%.
It notes international business investment had also remained stable, suggesting that “companies have not lost their appetite for international opportunities”.
Global connectedness has remained at a record high, suggesting the “resilience of international flows in the face of geopolitical tensions and uncertainty”.
Developing world growth
Amid ongoing speculation about the impact of a second trade war between the US and China, the report shone a spotlight on the growth of nations which are not closely allied to either nation. Between 2016 and mid-2024, their share of world trade rose from 42% to 47%.
Authors highlighted the UAE, India, Vietnam, Brazil and Mexico as experiencing “especially large trade share gains”.
It went on to note that, beyond these countries, other nations “not even classified as ‘leaning’ toward one or the other” also increased their share of global trade from 15% to 17%.
Fragmentation overstated?
Staying with China and the US, the report notes that, while increased international tension and the fracturing of global trade into “rival geopolitical blocs” has led to shifts in international flows and diminished trade between large economies, “we are still far away from a split of the world economy into disconnected geopolitical blocs”.
It also highlights that, though bilateral trade between the US and China did fall between 2016 and 2024 – from the first Trump presidency and trade war to the present – this only reflects a small fraction of global trade: from 3.5% of the value of global goods trade to 2.6%.
The report suggests that, while “geopolitically driven shifts in international flows […] naturally captivate the world, it is essential to keep their magnitudes in perspective”.
Over the same period of time, the share of world trade between close Chinese and US allies also experienced a minor fall, from 13% to 10%. However, the report also notes that shifts in Russia’s trade flow has an outsized impact on this drop – excluding Russia from the figures saw their share fall from 11% to 10%.
