Global trade: a period of uncertainty and its impact on credit insurance

Global trade has been experiencing a period of great uncertainty in recent years. It is driven by geopolitical conflicts, the strengthening of protectionist policies, as well as economic factors such as inflation and supply chain disruptions. One important indicator reflecting this situation is the US Trade Policy Uncertainty Index ( TPUI ), which shows the lack of confidence of businesses and investors in the long-term direction of international trade.

Growing uncertainty and its causes

Several key factors are increasing uncertainty in global trade:

1. Geopolitical tensions: The war in Ukraine, the crisis in China-Taiwan relations, and conflicts in the Middle East have a direct impact on supply chains and trade routes.

2. US-China trade relations: US trade tariffs and export controls on China are triggering reciprocal responses that disrupt international trade flows.

3. Rising protectionism: More and more countries are seeking to protect domestic industries by restricting imports and providing subsidies to domestic companies. For example, the US Inflation Reduction Act encourages production in the domestic market, reducing dependence on imports.

4. Economic challenges: Rising inflation, high interest rates, and the threat of a possible recession are forcing companies to reconsider investment decisions and reduce risk.

The impact of trade policy uncertainty on business

Rising uncertainty is slowing down business development, reducing investment in new projects and making long-term strategic planning more difficult. This is particularly true for exporters and international companies that depend on a stable trading environment.

One of the most important aspects is the reaction of the credit insurance market. When uncertainty increases:

• Insurance companies are tightening conditions:

Due to the growing risk of insolvency, credit insurance companies may reduce insurance limits or increase premiums. This is especially relevant for emerging markets and companies that work with higher-risk partners.

• Exporters face more expensive insurance:

Growing trade uncertainty increases the risk of business transactions, forcing companies to allocate more funds to protect against financial losses.

• Financing becomes more complex:

Banks and investors are more cautious about companies operating in unstable markets, and may therefore reduce their financing options or require stricter collateral.

Future prospects will depend on political decisions and the economic situation. If geopolitical tensions remain high, protectionist policies strengthen, and the economic environment remains unstable, global trade may continue to face significant challenges. However, if new trade agreements can be reached, the geopolitical situation stabilized, and supply chains restored, trade uncertainty may decrease.

One of the most important indicators to watch is the US trade policy uncertainty index. Its increase signals new challenges in global trade, while a decrease may indicate that the situation is stabilizing.

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The current period of uncertainty in global trade poses challenges for businesses, investors and financial markets. In this situation, it becomes even more important for companies to properly manage trade risks. Credit insurance is one of the most effective tools to protect against potential losses and ensure stable business growth even in difficult market conditions.

Want to learn more about how to protect your business? Contact us - we will help you assess potential risks and find the most suitable solutions.