Economic Buzz: Efforts to relocalise supply chains could decrease global trade by over 18% says OECD

Organization of Economic Co-operation and Development or OECD stated in a latest update today that efforts to relocalise supply chains could decrease global trade by over 18% and reduce global real GDP by more than 5%. Yet, these measures do not consistently improve resilience. In fact, GDP volatility increased in more than half of the economies modelled, challenging claims that relocalisation is inherently more stable, OECD noted. Only about 30% of global exports are overly concentrated in a few trading partners, suggesting most trade flows are still relatively well diversified. However, data show a concerning 50% rise in significant import concentration globally in the early 2020s compared to late 1990s levels, a trend that could increase vulnerability to external shocks. This rise is nearly entirely driven by non-OECD countries as average significant import concentration in OECD countries has remained relatively stable.

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