Going forward, these trends will need to be monitored. One of the big questions is whether the previous era of globalisation evolves into one with less global trade, or simply trade that involves different parties. Supply chains may end up being more resilient as a result, but this may come at a cost of higher input prices for firms and additional trade frictions. Much will depend on how new forms of production are created, and essentially whether more digitisation can offset these challenges.
This is what creates concerns – that an era of more open borders that, by-and-large, helped to improve efficiency, lift economic activity and keep a lid on prices could be coming to an end. This could well mean a deterioration in the growth-inflation trade-off if this plays out. However, it’s worth adding that global trade data may be weighed down by other factors such as a rotation to services trade (that is hard to capture) or environmental concerns meaning changes to what is produced and shipped. Automation of many processes may limit the supply side shock, too.
In any event, watching how trade flows evolve through 2023 and beyond will be key. Please check out our report for a wide selection of trade charts for key economies that we can monitor to see how global trade evolves in the years to come.