Global Trade's Roller Coaster Journey: Resilience, Restructuring, and New Divergence

Global trade's roller-coaster ride: resilience, restructuring, and new divergences

For decades, international trade has been a vital engine driving global economic growth and poverty reduction. However, this once broad highway has now turned into a bumpy roller-coaster track. Trade barriers are rising, geopolitical tensions flare up one after another, and supply chains are constantly being hit. Despite this, the latest trade data show surprising resilience. Analysis by World Bank experts paints a picture of global trade that is both challenging and full of adjustment dynamism.

The surge in trade restrictions

Over the past decade, trade protectionism has accumulated at an accelerating pace. In the first ten months of 2025, more than 2,500 new trade restriction measures were implemented globally, nearly five times the number in the same period of 2015. In the 2020s, global trade policy uncertainty has averaged nearly five times the level of the 2000s. The World Trade Organization's dispute settlement mechanism remains paralyzed, and multilateral trade reform has made slow progress. Since 2020, the number of deep trade agreements signed has averaged only about six per year, half the level of the 2000s.

This phenomenon has not occurred in isolation. Unequal distribution of the benefits of globalization has sparked widespread political discontent and weakened support for open trade. The international community is witnessing a contradictory landscape: countries talk about cooperation while tightening trade policies on the ground.

Where does resilience come from: corporate adaptation and supply chain restructuring

If one only looks at the policy direction, global trade seems to be heading into winter. But the actual data for 2025 tell a different story. As of August 2025, the monthly average growth of global merchandise trade volume was 4.7%, significantly higher than the 2.7% in 2024, and reversing the 0.7% contraction in 2023. Companies have not sat idle; instead, they have actively adjusted supply chains, made full use of existing trade preferences, and built higher inventories to hedge against policy risks. These practices have significantly limited the pass-through of tariff increases to final prices.

Services trade has shown even greater independence. In particular, areas represented by commercial services and information services continued to grow in 2025. Although the new export orders index for manufacturing returned to contraction territory in April, signaling that growth momentum may cool, the overall resilience of trade has still exceeded most forecasts.

Developing economies: deeper integration and closer South-South ties

Developing economies (EMDEs) have undergone a profound transformation in their role in global trade. Over the past decade, they have contributed nearly 40% of global trade, compared with only 25% at the beginning of this century. From 2000 to 2024, the total volume of world merchandise and services trade nearly quadrupled, and more than 40% of that growth came from these economies.

More importantly, trade links among developing economies have become increasingly close. By 2024, about 60% of developing economies exported more to their peers than to advanced economies, compared with only 28% in 2000. This shift constitutes a new pillar of the global trading system—South-South trade is becoming a key channel for supply chain extension and production capacity cooperation.## The Return of Regional Trade Agreements

While the global multilateral system remains stalled, regional economic and trade integration regained momentum in 2025. More than ten trade agreements were signed over the year, twice the annual average between 2020 and 2024 and higher than the average in the 2010s. These agreements reflect a common aspiration among countries to diversify partners, strengthen regional supply chains, and reduce external vulnerability.

Notable examples include the continued expansion of the CPTPP, and the African Continental Free Trade Area (AfCFTA), which now covers 55 countries and has become the free trade area with the most participants. The EU signed agreements with Mercosur, Mexico, and Indonesia, while accelerating negotiations with India. China and ASEAN also completed the upgrade of their free trade area. All these signs indicate that countries have not abandoned global trade; rather, they are redefining how they participate through regional cooperation.

Simulation studies show that if the African Continental Free Trade Area fully implements trade facilitation measures, African exports could grow by more than 30% by 2035, and intra-regional exports would double. If the Regional Comprehensive Economic Partnership (RCEP) lowers trade costs and simplifies rules of origin, trade among members is expected to increase by 12% and real income by 2.5%. These figures reveal the enormous dividends that regional cooperation can bring.

Policy Choices: Four Essential Questions for the Future

For developing economies, future trade policy requires clearer strategic choices. A World Bank report proposes four priority directions:

First, uphold openness and cooperation. Tit-for-tat protectionism is not a way out. Only by deepening cooperation with like-minded partners can countries gain room for development. Implementing regional agreements is more challenging than signing them, but the potential gains are substantial.

Second, reduce trade costs and address infrastructure shortcomings. Currently, non-tariff trade costs in developing economies remain significantly high, equivalent to bearing an additional tariff of about 50 percentage points compared with advanced economies. Investing in transport, ports, and digital infrastructure, and simplifying customs procedures, can directly boost export competitiveness.

Third, use industrial policy well and embrace services trade. Industrial policy should be targeted, transparent, time-bound, and consistent with WTO rules. Services trade has more than tripled between 2005 and 2023, with particularly rapid expansion in digital and business services. Increasing investment in human capital and digital skills is an unavoidable task.

Fourth, safeguard the multilateral system and seek institutional certainty. Between 1995 and 2020, thanks to the decline in trade costs brought about by WTO-related reforms, global GDP grew by nearly 7%, and low-income countries saw an increase of more than 30%. A predictable multilateral system is an important public good for developing economies embedded in global value chains.

Conclusion: The Roller Coaster Will Continue, but Policy Shapes the DirectionThe rollercoaster of global trade is far from slowing down. Protectionism and regionalization coexist, while policy uncertainty intertwines with corporate adaptability. What is certain is that the global trading system is undergoing a profound structural reshaping. For developing economies, this is both a risk and a rare opportunity. The key lies in how to find their own equilibrium in this new phase full of turbulence.