Global Risk Indexes (19-02-2025)

Global 98 (0 —)
MENA 98 (-1 ▼)
APAC 98 ( —)
Europe 98 ( —)
Africa 98 ( —)
AMERs 98 ( —)
Markets 98 ( —)
Graham Westcott, Global Markets region analyst at Worldwise Analytica

Graham Westcott

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

Economic Order in Flux: Trade Wars, Energy Shocks, and Financial Volatility Signal Structural Shifts

As markets adjust to an era of economic fragmentation, trade wars, energy supply disruptions, and financial instability are creating systemic risks that will define global economic trends for years to come. The past 24 hours have revealed new fractures in global trade, shifting supply chain dependencies, and escalating strategic competition in key economic sectors.

U.S.-China Trade War: Protectionism Reshapes Global Economic Strategy

The escalating U.S.-China trade war is no longer just a tariff dispute—it is driving structural changes in global supply chains, trade alliances, and corporate investment strategies. China's latest 25% tariffs on U.S. semiconductors and pharmaceuticals represent a significant escalation, not only impacting American exports but also signaling Beijing’s intent to insulate its economy from Western supply chains.

The ripple effects will be far-reaching. Taiwan and South Korea, key semiconductor hubs, must now recalibrate their trade flows to navigate between U.S. and Chinese markets. European and Indian pharmaceutical firms see an opportunity to fill the gap, but the geopolitical uncertainty surrounding U.S.-China relations will make long-term planning increasingly difficult.

Meanwhile, Trump’s threat of 25% tariffs on auto imports could be a defining moment for global trade. If implemented, it would hit Germany, Japan, and South Korea particularly hard, accelerating the shift toward regionalized trade agreements and reinforcing the trend of deglobalization.

Energy Market Volatility: Supply Chains Are Breaking Apart

The fragmentation of global energy markets continues, with new disruptions emerging in Kazakhstan and Libya. A Ukrainian drone strike on Russian pipelines has slashed Kazakhstan’s oil exports by 30-40%, significantly tightening global supply and pushing Brent crude prices above $75 per barrel. The strike highlights the increasing vulnerabilities in global energy logistics, as infrastructure becomes a key target in geopolitical conflicts.

Libya’s internal power struggle has now spilled into energy markets. The rise of private oil exporters linked to General Haftar is creating a parallel oil trade network outside government control. Payments are being routed through Dubai-based intermediaries, circumventing Western financial oversight. This development undermines Libya’s state-run National Oil Corporation and presents a direct challenge to Western sanctions enforcement.

With oil markets already under pressure from Middle East tensions and shifting supply chains, these disruptions could add new inflationary pressures to the global economy, complicating central banks' monetary strategies.

Financial Market Response: Diverging Central Bank Policies and Currency Instability

The widening gap in global monetary policy strategies is creating new currency pressures and financial instability. The Reserve Bank of New Zealand’s 50 basis-point rate cut signals an aggressive move toward easing, reflecting growing fears of economic slowdown. However, the Federal Reserve remains reluctant to cut rates due to persistent inflation risks. This divergence is driving sharp currency movements, with the New Zealand dollar weakening and the U.S. dollar holding firm.

Meanwhile, Germany’s investor sentiment has improved, as the ZEW index climbed to 26.0 points amid hopes for government spending to offset economic weakness. However, the European economy remains structurally fragile, and the euro’s long-term stability is in question amid ongoing trade disruptions.

Looking Ahead: A World Defined by Economic Fragmentation

The global economy is transitioning away from decades of integration into a new era of strategic competition and self-sufficiency. Trade policy is now a tool of economic warfare, energy markets are becoming increasingly regionalized, and financial markets are adjusting to a world of diverging central bank policies.

For businesses and investors, navigating this landscape will require adaptability. The old playbook of globalization is fading, replaced by a reality where trade agreements are fragile, supply chains must be diversified, and national interests dictate economic strategy. In this new era, volatility is the norm, and those who fail to adjust will be left behind.

Geopolitical Risk Assessment for the Global Markets
(19-02-2025)

The global economic order is undergoing a structural shift as the U.S.-China trade war intensifies, energy markets fragment, and financial volatility grows. The expansion of tariffs, supply chain disruptions, and geopolitical realignments are accelerating the trend toward deglobalization. Trade protectionism is no longer an isolated issue—it is now fundamentally reshaping investment flows, corporate strategies, and national economic policies. Meanwhile, the crisis in global energy supply chains, exacerbated by the Libya oil sector split and Kazakhstan's pipeline disruptions, is creating new risks for both emerging and developed markets. Currency instability and divergent central bank policies are further complicating global financial conditions. The world is entering a prolonged period of economic fragmentation, where national interests and strategic industries will increasingly shape financial and trade policies.

Geopolitical Risk Index

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

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