QNB says global trade is moving from an era of rapid globalization to a more fragmented reality. That shift follows a generation-long path that began with "hyper-globalization" in the first decade of the millennium, passed through "slowbalization" in the second, and has arrived at today's landscape of greater fragmentation and growing policy-related restrictions.

In its weekly report, the bank noted that this shift has not dismantled trade or supply chains so much as reshaped them, alongside the signing of new agreements. It said the era of deepening integration built on clearer rules is giving way to a trading environment shaped more by strategic and geopolitical considerations.

It argued that these developments carry important implications for global growth and prices, as well as for the development prospects of emerging economies that have relied on open markets to boost growth and narrow the gap with advanced economies.

Global trade was one of the main engines of the world economy at the start of the 21st century, the report said: trade in goods and services quadrupled between 2000 and 2024, while the ratio of trade to global output peaked at about 60% in 2008.

According to the report, the global financial crisis was a major turning point for international trade. It ended a period of rapid expansion often described as the era of "hyper-globalization", after which trade growth began to slow.

Since then, the report said, momentum has faded, and the global trading system has recently entered one of its most turbulent periods in decades, driven by a wave of tariffs and trade restrictions.

Understanding this shift matters greatly, given trade's role as one of the strongest drivers of global economic growth and poverty reduction in the modern era.

In its weekly analysis, QNB reviewed three phases in the evolution of global trade: the rapid expansion of the first decade of the 21st century, the "slowbalization" that followed the global financial crisis, and the recent rise in protectionism, which is now reshaping the map of global trade.

The report noted an exceptional expansion in global trade integration in the first decade of the 21st century, driven by China's accession to the World Trade Organization in 2001, the spread of global value chains and the steady decline in trade costs. These factors helped goods, components and services move across borders at an unprecedented pace.

It said this expansion was reinforced by other factors, chiefly the faster standardization of shipping containers, rapid growth in information technology, and successive rounds of tariff cuts and trade liberalization.

During that period, global trade kept growing at nearly twice the rate of global output, lifting the ratio of trade to GDP and deepening the integration of emerging market economies into the global trading system.

It noted that emerging markets' share of total global trade rose from about a quarter in the early 2000s to about 40% today, redrawing the geographic map of global trade.

As for the second phase, QNB said the 2008 global financial crisis marked a turning point for global trade, which then moved from rapid expansion into a period of slower trade growth.

The report noted that after the sharp contraction that followed the global financial crisis and the recovery in 2009 and 2010, trade growth settled at a much slower pace, while the ratio of trade growth to global GDP growth fell from about two-to-one before the crisis to about one-to-one after it.

It attributed this to the maturing of global value chain expansion and the move by major economies, such as China, to drive growth through domestic demand.

The bank noted that trade openness plateaued during this phase rather than continuing to rise, giving rise to the term "slowbalization" to describe an era in which trade integration remained high but was no longer increasing at the rapid pace of the previous phase.

QNB sees the third phase as the most consequential, as the global trading system has entered a more contentious stage marked by rising protectionism.

According to Global Trade Alert, the number of new trade-restrictive measures implemented worldwide almost doubled between the decade ending in 2010 and the decade ending in 2020, rising from about 3,000 measures a year to about 6,000. The report noted that the value of imports affected by new tariffs and other import measures more than quadrupled last year, reaching the highest coverage in more than 15 years of monitoring.

It explained that successive rounds of tariff hikes and restrictive measures among major economies, together with a broader shift toward industrial policy and supply chain de-risking, have pushed both tariffs and trade policy uncertainty to levels far above historical norms.

Concluding its analysis, the bank said the effects of this shift are starting to show in short-term forecasts: after global merchandise trade volume grew by about 3% in 2024, growth is expected to slow sharply.

It highlighted the World Trade Organization's repeated warnings that the spread of trade-restrictive measures and policy uncertainty are the main downside risks to the global trade outlook.

The report concluded that trade fragmentation is increasingly following geopolitical lines, as trade is redirected toward partners seen as more reliable. It said this process raises costs and reduces efficiency, putting pressure on global productivity over time.