Global trade is heading into rough waters. Analysts are sounding the alarm as momentum fades, growth stalls, and the outlook darkens further. The situation is far from encouraging.
Current data suggests that the slowdown could deepen amid weakening consumer demand, high interest rates, and tighter fiscal policy. These factors are exerting significant pressure on cross-border flows of goods.
In this environment, currency strategists at Capital Economics say that the previous period of trade growth has run its course, replaced by a sideways trend. "Trade in goods, which is historically a bellwether of global economic health, has lost momentum in both advanced and emerging markets," analysts note.
A combination of structural and cyclical factors is weighing on global trade. The main reason is weak consumption in Western economies, particularly for imported goods. According to a key Netherlands Bureau indicator, global trade volumes have remained flat since the beginning of 2025 despite a revival in activity in the United States and parts of Asia.
Some sectors, such as the development and production of technology components, have recorded growth. Still, the broader picture points to stagnation.
Asia is also losing steam. China, until recently seen as the engine of global exports, has sharply reduced its contribution to trade growth. Chinese exports have faltered amid geopolitical tensions, weaker demand in global markets, as well as Western companies’ efforts to diversify supply chains.
Meanwhile, tighter monetary and fiscal policies are restraining domestic demand across most developed nations. Against this backdrop, Capital Economics does not expect a meaningful recovery. Instead, the firm warns of a “prolonged soft patch” for the global economy that will last until 2026. The research company says that trade growth will likely lag behind global GDP. This marks a sharp reversal from the decade-long trend of trade consistently outpacing the broader economy.
The backdrop of global trade also remains fragile. Exporters are facing uncertain demand, logistical challenges, and shifting political conditions. "For now, the golden age of global trade looks increasingly like a thing of the past," Capital Economics concludes.
