UNCTAD says geoeconomics reshapes trade and development prospects

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Geoeconomics reshapes trade prospects

Highlights

UNCTAD reports world trade is set to reach a record $35 trillion in 2025 and grow by about 4.5% in 2026 despite fragmentation.
Geoeconomic strategies—including trade restrictions, subsidies and technology controls—are reshaping supply chains, production hubs and investment decisions especially in strategic sectors.
Developing economies face both openings and risks, as illustrated by the Democratic Republic of the Congo holding 73% of mined cobalt in 2025 but under 1% value capture in green supply chains.

Trade growth persists as policy tools become more strategic

As reported by UNCTAD, world trade remains resilient despite geopolitical tensions, fragmentation and rising financial risks, reaching a record $35 trillion in 2025 and staying on track to grow by about 4.5% in 2026.

The agency’s latest Trade and Development Report defines geoeconomics as the use of economic tools to advance strategic objectives. It says governments are increasingly relying on trade restrictions, financial subsidies, investment rules and technology controls to compete in sectors tied to economic and national security, including semiconductors, artificial intelligence infrastructure and clean-energy technologies.

That shift is increasingly influencing where companies source goods, build production networks and invest. Strategic relationships, location and perceived reliability are gaining weight alongside cost and efficiency, while trade links between some major partners weaken and new supplier relationships emerge.

Developing economies face openings and value-chain risks

UNCTAD says the new environment can create opportunities for developing economies to become alternative suppliers, production hubs or regional connectors. Countries with large domestic markets, strategic locations and stronger institutions can deepen cooperation in trade, technology, infrastructure and finance while expanding their role in regional value chains.

The report points to India’s sharing of digital public infrastructure, Brazil’s expansion of its instant payment system across South America, and the Pan-African Payment and Settlement System as examples of initiatives that can reduce payment barriers and widen market access. It adds that such efforts can complement the multilateral trading system and strengthen collective bargaining power.

At the same time, UNCTAD warns that participation in supply chains does not guarantee a meaningful share of value. The Democratic Republic of the Congo accounts for about 73% of the world’s mined cobalt in 2025, yet domestically owned producers represent just 1% of national output, while Africa captures less than 1% of value in green supply chains.

The agency says development safeguards should remain anchored in multilateral rules, with the World Trade Organization still essential for non-discrimination and core trade disciplines. It adds that developing economies need support to meet standards, certification, traceability, digital customs and regulatory requirements, or firms risk exclusion from markets even when they remain competitive.

In our earlier coverage of how wars and tariffs are reshaping global trade, we explained that companies are redesigning supply chains and shipping routes to build resilience against repeated disruptions. We noted that these shifts could persist beyond the immediate conflicts, supporting a longer-term move toward diversification and more regional trade even as uncertainty remains elevated.

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