Analyses focus on current issues of particular relevance to Danmarks Nationalbank’s objectives. The analyses may also contain Danmarks Nationalbank’s recommendations. They include our projections for the Danish economy and our assessment of financial stability. Analyses are targeted at people with a broad interest in economic and financial matters.
Fragmentation of global trade could challenge the Danish economy
Supply chain disruptions and rising geopolitical tensions in recent years are increasing the risk of a gradual reversal of global economic integration. This could take the form of increased fragmentation of global trade as the world economy becomes more divided. According to model calculations, increased fragmentation can lead to significant economic losses and higher pressure on consumer prices globally and in Denmark. The impact on the Danish economy could be particularly significant because Denmark is a small, open economy that is highly dependent on trade with the rest of the world. In the short run, certain sectors may be especially vulnerable to fragmentation, and supply problems for critical inputs could cause major disruptions to production and the economy.
Key messages
Why is it important?
After decades of increasing global economic integration, the world is now experiencing changes in global trade and economic relations between countries. This can lead to new trade patterns, lower GDP, and higher price level. It is important for Danmarks Nationalbank to understand and assess these consequences to help ensure a robust Danish economy. This analysis examines how fragmentation of global trade could affect the Danish economy and which industries and product groups are particularly vulnerable.
Main chart
The number of new trade-restrictive measures is increasing worldwide
Note:
The number of trade-restrictive measures includes both import-oriented and export-oriented trade restrictions but only measures that are highly likely to alter international trade flows are counted. All measures included reflect unilateral actions and exclude bilateral or multilateral trade agreements. Data is adjusted for delays in reporting time, calculated with an annual cut-off date of 31 December.
Source:
Global Trade Alert and own calculations.