Global trade has undergone significant transformation over the past two decades, shifting from rapid expansion in the early 2000s to a more fragmented and protectionist landscape today. Between 2000 and 2024, world trade in goods and services nearly quadrupled, with the trade-to-global output ratio peaking at around 60% in 2008. This period, often characterized as an era of hyper-globalisation, was marked by an unprecedented deepening of trade integration driven by factors such as China’s accession to the World Trade Organization in 2001, the rise of global value chains, declining trade costs, and advances in shipping and information technology.
During the 2000s, global trade expanded at roughly twice the rate of overall economic output, significantly increasing the share of emerging markets in global commerce. Emerging economies’ participation in world trade rose from approximately 25% in the early 2000s to about 40% today, altering the geographical distribution of trade and incorporating many developing countries more centrally into the global economy.
The global financial crisis in 2008 marked a turning point for international trade growth. After a sharp contraction and subsequent rebound in 2009 and 2010, trade growth slowed considerably. The ratio of trade growth to global economic growth fell from about two-to-one before the crisis to closer to parity afterward, indicating a plateau in trade openness. This phase, coined “slowbalisation,” reflected a maturation of global value chains and a shift by large economies, including China, toward more domestically focused demand.
More recently, global trade has entered a period characterized by rising protectionism and increasing policy uncertainty. Data from the Global Trade Alert show that the annual number of new trade-restrictive measures worldwide has approximately doubled from around 3,000 in the 2010s to 6,000 in the 2020s. Over the past year, the extent of imports affected by new tariffs and other barriers surged more than fourfold, reaching the highest levels observed in over fifteen years. This rise in protectionist measures has been accompanied by supply-chain diversification strategies, often described as “de-risking,” and a stronger emphasis on industrial policies by various governments.
The ongoing escalation of tariff disputes and retaliatory actions among major economies has elevated trade-policy uncertainty to historically high levels. These developments have begun to influence the near-term outlook for global commerce: after growing nearly 3% in 2024, world merchandise trade is expected to slow significantly. The World Trade Organization has repeatedly cited the spread of protectionist measures and associated policy risks as the primary downside threat to trade growth.
The increasing fragmentation of trade tends to follow geopolitical lines, with countries redirecting commerce toward partners deemed more stable or reliable. This realignment raises costs, reduces efficiency, and could dampen global productivity over time. Despite these challenges, trade has shown resilience as new agreements continue to be negotiated and supply chains adapt rather than collapse. Nonetheless, the era of steadily deepening, rules-based global integration appears to be giving way to a more cautious and strategic approach. This shift carries important implications for economic growth, inflationary pressures, and the development trajectories of emerging economies that have historically benefited from open, global markets.