Global Risk Indexes (02-03-2025)

Global Economic Fragmentation Deepens: U.S.-China Decoupling, Energy Disruptions, and Financial Market Instability Reshape Global Trade

The past week has confirmed that the world is undergoing an irreversible shift towards economic nationalism, supply chain restructuring, and financial volatility. The escalation of U.S.-China trade hostilities, the fragmentation of global energy markets, and the turbulence in financial markets indicate that geopolitical rivalries are now driving economic policy more than market efficiency.

U.S.-China Trade War Expands: Supply Chains Face Deeper Disruptions

The Trump administration has imposed new restrictions on Chinese AI, semiconductor, and technology sectors, accelerating Washington’s strategy of economic containment. In response, China has implemented severe export controls on rare earth minerals, a move that threatens Western technology and defense industries.

The financial consequences of this decoupling are now visible. The Chinese yuan has depreciated amid capital outflows, while U.S. and European tech stocks have suffered volatility as supply chain risks mount. Meanwhile, multinational corporations are scrambling to relocate supply chains to Southeast Asia, India, and Latin America to mitigate risk exposure.

Energy Market Disruptions: Middle East and Eastern Europe in Focus

The global energy sector remains in turmoil. Brent crude surged past $91 per barrel after the U.S. imposed tougher sanctions on Iran’s oil sector, disrupting Asian markets reliant on Iranian crude.

Meanwhile, the ongoing conflict in Ukraine is impacting European energy security. Ukrainian missile strikes have damaged Russian-controlled refineries, forcing Moscow to impose retaliatory restrictions on energy exports to the EU.

Additionally, Saudi Arabia and OPEC are considering production cuts to counteract declining revenues, adding another layer of uncertainty to the global oil market.

Financial Markets React: Flight to Safe-Haven Assets Accelerates

Financial markets are reacting to this turmoil with increased volatility. Gold has reached an all-time high of $3,300 per ounce, as investors seek stability amid global uncertainty.

The U.S. dollar has continued to strengthen, increasing pressure on emerging market currencies such as the Brazilian real and Indian rupee. Meanwhile, global equity markets have faced turbulence, with Wall Street experiencing its fifth consecutive decline due to concerns over inflation and trade instability.

Looking Ahead: The Structural Realignment of the Global Economy

The global economic system is no longer operating under a free-market model but rather a structure shaped by national security concerns. Economic fragmentation, resource nationalism, and financial market interventions are becoming permanent features of global trade.

For businesses, investors, and policymakers, the coming months will demand adaptability. Supply chain diversification, geopolitical intelligence, and risk hedging will be critical for navigating this increasingly uncertain landscape.

Geopolitical Risk Assessment for the Global Markets
(02-03-2025)

The global economic order is experiencing unprecedented fragmentation, with trade wars, supply chain realignments, and financial market turbulence defining the week. The U.S.-China rivalry has intensified, with both nations implementing economic and technological restrictions that are accelerating global decoupling. Meanwhile, energy markets are facing severe disruptions, with U.S. sanctions on Iran, OPEC+ production shifts, and European supply chain vulnerabilities reshaping oil flows. Financial markets remain highly volatile, with gold soaring past $3,300 per ounce and emerging market currencies under pressure as capital outflows intensify. As economic nationalism and geopolitical competition redefine global trade and investment patterns, businesses and policymakers must prepare for a prolonged era of uncertainty, protectionism, and inflationary pressures.

Geopolitical Risk Index

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

Previous Briefings

• Global Economic Fragmentation Deepens: U.S.-China Decoupling, Energy Disruptions, and Financial Market Instability Reshape Global Trade - (02-03-2025)
• Global Economic Order Fractures Further: Trade Wars, Energy Shocks, and Financial Market Volatility Accelerate Realignments - (01-03-2025)
• Global Trade and Financial Markets in Turmoil: U.S.-China Tensions, Energy Volatility, and Economic Nationalism Reshape the Future - (28-02-2025)
• Global Economic Order Fragments: U.S.-China Conflict, Energy Market Shocks, and Financial Volatility Reshape Trade and Investment Flows - (27-02-2025)
• Economic Fragmentation Intensifies: U.S.-China Tech War, Protectionist Trade Policies, and Energy Market Shocks Drive Global Instability - (26-02-2025)
• Economic and Financial Decoupling Accelerates: Trade Wars, Energy Instability, and Market Volatility Reshape Global Economy - (25-02-2025)
• Geopolitical and Economic Fragmentation Accelerates: Trade Wars, Energy Supply Shocks, and Financial Volatility Define the New Era - (24-02-2025)
• The End of Economic Integration: Trade Wars, Energy Instability, and Financial Market Fractures Define the New Global Order - (23-02-2025)

See all previous briefings