Trade and Growth: Strained Resilience

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Geopolitical tensions, changing trade relationships, and supply chain disruptions are reshaping global commerce, investment, and economic growth.
The trade shocks of 2025 created headwinds to global growth and stoked inflation concerns.
Trade volumes were up nearly 5 percent in 2025, with trade in technology-related goods continuing to grow briskly.
The structural shift in US trade policy in early 2025 accelerated the reorientation of trade, most notably in Asia.
Many economies negotiated bilateral trade understandings with the US and pursued trade opportunities and agreements with each other and within regions, based on existing trade rules and systems.
Trade growth is expected to slow in the current year, exacerbated by the shock emanating from the war in the Middle East.

According to the International Energy Agency (IEA), the war—and subsequent closure of the Strait of Hormuz—caused the largest ever cut to global energy supplies.
The war has led to knock-on effects on other commodities, food supplies, and broader supply chains.
Enduring damage to energy export infrastructure in the region could continue to limit supply.
Uncertainty and the need to build supply chains that are more resilient, but less efficient, heavily influence trade and investment decisions.
Recovery is hampered by global trade barriers that remain much higher than they have been for decades.

IMF analysis shows how excessive imbalances increase vulnerability to economic shocks and financial instability, raising the risk of sudden sharp corrections.
High external and domestic imbalances are identified as a pressing global risk to be addressed alongside efforts to diversify and deepen trade and sources of supply.

The IMF is providing tailored country and multilateral advice and encouraging countries to cooperate and scale back impediments to international commerce.
Predictable, transparent, and well-communicated trade policy frameworks help reduce uncertainty and anchor business and consumer expectations.
The IMF has advised regions to be agile in looking for further opportunities to advance trade, including through multilateral and plurilateral negotiations.
The IMF is providing deeper analysis of how to address today’s high global imbalances and their negative spillovers while stimulating growth.

For external surplus countries such as China:
- Continued progress toward consumption-led growth can improve welfare and narrow trade and current account surpluses.
For external deficit countries such as the US:
- Credible fiscal consolidation could reduce demand for imports and external financing.
At the regional level:
- Further integration within groups such as the Association of Southeast Asian Nations (ASEAN) can support resilience.
- Deepening the European Union’s single market and enacting reforms to stimulate private investment will support more resilient and sustainable growth.