Remarkable changes are taking place in global trade and the financial world. According to analysts at Wells Fargo, the world economy is entering a second era of deglobalization, characterized by fragmentation in global trade and finance. As a result, spheres of influence will be divided between rival blocs led by the United States and China. This, they say, is the future that awaits us.
In the view of these analysts, rather than forming a single, integrated global economy, countries with similar positions on geopolitical issues and on external and internal economic policies will form separate blocs. Over time, trade between these blocs will decrease or potentially cease altogether, and wider financial and geopolitical relations will ultimately come to an end, Wells Fargo believes.
Bank experts point out that relations between the US and China have worsened, despite trade truces and tariff agreements. “Cooperation, in the broadest sense of the term, between the world's largest economies has receded sharply,” Wells Fargo notes. Looking ahead, both countries are expected to reduce their dependence on each other, rather than pursue deeper integration.
According to a model developed by Wells Fargo’s currency strategists, most G10 countries will gravitate toward the United States. Many Asian and African countries, on the other hand, may align themselves more closely with China. Analysts observe that Latin America appears to be the most divided, as neither the US nor China dominates in the region. This makes it a potential battleground for political and economic influence.
Wells Fargo suggests that the formation of the largest economic blocs will take several years. “However, the global economy is still far from full fragmentation,” the bank concludes. Final alliances are likely to be formed only after significant changes in trade and geopolitics.
