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Trade Deals in a DeGlobalised World

During 2019, world trade was in its 15th year of globalisation as 2004 was a year where major trade unification took place. But it only took one year to bring it all towards chaos and that got triggered by 2020 lockdowns. Though they were important to restricting the pandemic it came at the cost of a full reset in terms of trade.

In 2021, approximately 600 regional trade agreements became active as per WTO. This is the highest number since data was collected and that was the year 1948. It indicates that many countries were forced to look at their requirements rather than global requirements.

This trend has been more prominent when agreements concern technology, energy and food. As they are the major contributors to the global economy and inflation. The more de-globalisation in these categories of trades the more uncertain growth and inflation trends in the short and medium term.

On top of such disorientation, as agriculture production is lower due to El Niño many countries have put restrictions on exports. And due to national security and political reasons same has happened to technology exports.

This might lead to overcapacity and oversupply in various categories taking away many companies' pricing power. However, it is a scenario that would only play out in the long term when the “new world order” settles.

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