Mounting trade barriers and shrinking global commerce are amplifying the threat of a worldwide economic downturn, according to Nigel Green, CEO of deVere Group, a leading international financial advisory firm.
Green’s warning follows data showing a 1.3% year-on-year contraction in global goods trade during the final quarter of 2024—the steepest decline since the 2008 financial crisis—amid deteriorating manufacturing activity and escalating tariffs between major economies.
“The engine of globalization that fueled decades of expansion is now being throttled,” Green said, pointing to weakened business confidence, stalled corporate investments, and supply chain disruptions. The International Monetary Fund (IMF) has downgraded its 2025 global growth forecast, citing “mounting trade restrictions,” while the World Bank estimates protectionist policies could shave 0.5 percentage points off global GDP this year.
Emerging markets face acute risks, with capital outflows accelerating as export orders falter. Advanced economies are not immune: manufacturing job losses are rising, corporate profits are softening, and financial markets have grown volatile. Currencies of export-dependent nations, such as China and Germany, have weakened, while safe-haven assets like gold and the Swiss franc surged.
Political decisions are exacerbating the strain. Recent tariff escalations by the U.S., China, and the European Union—targeting steel, electric vehicles, and agricultural goods—signal a deepening trade conflict. “Political leaders are weaponizing trade for strategic goals, but the costs will hit consumers through higher prices and slower growth,” Green warned, drawing parallels to the 1930s, when tit-for-tat tariffs deepened the Great Depression.
Despite the bleak outlook, Green urged investors to prioritize diversification and global exposure. “Sitting still is not an option. Resilience and adaptability are critical in this new economic reality,” he said, emphasizing opportunities in sectors less tethered to trade volatility, such as technology and renewable energy.
The current trade landscape mirrors historical missteps, yet modern supply chains’ complexity magnifies risks. The IMF’s repeated growth downgrades reflect concerns that protectionism could unravel decades of economic integration. Meanwhile, central banks face a dual challenge: curbing inflation without stifling growth amid geopolitical fractures.
Emerging markets, reliant on export revenues, are particularly vulnerable. Countries like Vietnam and Mexico, which thrived on globalization, now grapple with redirected investment and shrinking demand. In contrast, economies with robust domestic markets, such as India and Indonesia, may cushion some shocks but cannot fully decouple from global trends.
The eurozone’s manufacturing slump and China’s export-driven slowdown underscore the interconnected threats. Even the U.S., with its consumer-driven economy, faces headwinds as corporate earnings stagnate.
Green’s caution aligns with broader analyst sentiment. JPMorgan recently noted that global trade growth could flatline in 2025 if tensions persist—a scenario that would test policymakers’ ability to stabilize economies without reverting to austerity.
As the drumbeat of trade wars grows louder, the world edges closer to a recessionary tipping point. The lesson from history is clear: without coordinated policy shifts, the cycle of retaliation and decline will deepen. For now, vigilance—not panic—remains the watchword.
