Global Risk Indexes (16-02-2025)

Global 98 (0 —)
MENA 99 (+1 ▲)
APAC 97 ( —)
Europe 98 ( —)
Africa 98 ( —)
AMERs 98 ( —)
Markets 97 ( —)
Graham Westcott, Global Markets region analyst at Worldwise Analytica

Graham Westcott

Navigating Global Intersections: Where Trade, Finance, Energy and Geopolitics Converge

Global Economic Fragmentation Accelerates: Trade Wars, Energy Shocks, and Market Volatility Define 2025

The past week has been defined by escalating trade tensions, shifting energy markets, and mounting financial instability. The global economic order is being restructured as the U.S.-China trade war deepens, energy market disruptions reshape supply chains, and investors react to increased monetary policy divergence.

Trade War Fallout: The New Phase of Global Economic Fragmentation

U.S.-China trade tensions have reached a critical threshold. With Trump's \reciprocal tariffs\ and China's retaliatory duties, global trade flows are being redrawn at an unprecedented pace. The key consequence is the acceleration of global economic fragmentation: supply chains are being rerouted, manufacturers are facing margin pressures, and currency markets are responding with heightened volatility.

The deflationary risks stemming from China's export-driven price war are now tangible. To compensate for falling U.S. demand, Chinese firms have flooded global markets with surplus goods, leading to sharp price declines in key industries such as electronics, automotive components, and consumer goods. However, this is putting pressure on global competitors, prompting calls for further protectionist measures from the U.S. and EU.

Energy Market Disruptions: Realignment and Supply Chain Struggles

The energy market is undergoing rapid realignment as major economies adjust to geopolitical constraints. U.S. sanctions on Russian oil have forced China and India to seek alternative suppliers, reshaping global crude flows. China has turned to Angola, Brazil, and Middle Eastern suppliers, while India is ramping up stockpiling efforts.

Meanwhile, Brazil's ethanol industry is facing a crisis, with U.S. tariffs squeezing margins for key producers. The disruption in biofuels trade is likely to have long-term consequences, particularly as global energy markets shift toward alternative energy sources.

Financial Markets: Gold Soars, Dollar Weakens

With geopolitical risks mounting, investors have turned to safe-haven assets, pushing gold prices above $3,000 per ounce. The weakening U.S. dollar has also fueled speculative movements into commodities, while equities remain volatile due to uncertainty over monetary policy shifts.

European stock markets have shown resilience, with investors betting on potential fiscal expansion in Germany. However, industrial production remains weak, suggesting that economic recovery remains fragile.

Central Banks and Interest Rate Divergence

Global monetary policy is diverging, creating volatility in currency and bond markets. The U.S. Federal Reserve is maintaining a cautious stance due to persistent inflation risks, while the European Central Bank and Bank of England are leaning toward rate cuts. Meanwhile, emerging markets are navigating currency pressures as capital outflows intensify.

Looking Ahead: The Risks of Economic and Financial Fragmentation

The coming months will be defined by further economic fragmentation as trade, finance, and technology competition reshape global markets. The U.S.-China conflict is unlikely to de-escalate, ensuring continued supply chain disruptions and currency volatility. Meanwhile, energy realignments will place pressure on global commodity markets, particularly as geopolitical tensions in the Middle East and Africa persist.

For investors and businesses, risk management strategies must prioritize diversification, inflation hedging, and adaptability to rapidly shifting trade and financial dynamics. The global economy is entering a period of sustained volatility, requiring a recalibration of economic strategies to navigate the uncertainties ahead.

Geopolitical Risk Assessment for the Global Markets
(16-02-2025)

The global economy is experiencing its most turbulent period in years, driven by intensifying trade wars, energy disruptions, and financial market volatility. The U.S.-China trade conflict has entered a dangerous new phase, disrupting global supply chains and exacerbating deflationary risks. Meanwhile, sanctions on Russian oil and retaliatory tariffs are reshaping energy trade, forcing major economies to reassess their sourcing strategies. Currency and commodity markets remain highly unstable, with gold surging as investors seek safe havens. The persistence of high inflation, coupled with central banks' divergent monetary policies, is fueling uncertainty across global financial markets. Short-term risks remain severe, while long-term structural changes in global trade, finance, and technology are accelerating economic fragmentation.

Geopolitical Risk Index

Developments to Follow for the Global Markets (See All Global)

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