K-shaped globalization: How geopolitics is reshaping trade and investment corridors
The Deloitte Geoeconomic Dynamics Index offers insights into the major geoeconomic trends and their implications for businesses
The 2026 edition of the Deloitte Geoeconomic Dynamics Index reveals a global system under strain. Integration is declining as geopolitical alignment recedes, impacting trade and investment. Dynamics are diverging as the West is decoupling while the Global South is leading a new wave of integration. The Deloitte Geoeconomic Index combines data across trade, finance, and geopolitics to track these shifts in international connections. We identify three key trends that define the change in global integration with a focus on Europe’s evolving response.
As global geopolitical alignment disintegrates, trade and investment are increasingly affected
Geopolitical pressure is reshaping global commerce. What remains of the post-Cold War consensus has fractured. To understand today's economy, economics and geopolitics must be examined together, not separately. The current patterns will shape opportunities and risks for years to come. For companies making long-term investment decisions, identifying which trade corridors are thickening and which are thinning is crucial. Policymakers and investors need reliable intelligence on the ways economies are integratingor decoupling.
However, debates about globalization often rely on selective, anecdotal data or single-dimensional indicators that capture only one aspect of a multidimensional phenomenon. The Deloitte Geoeconomic Dynamics Index tracks and analyses 38 indicators across five dimensions for 249 countries and territories. For this edition, we leverage over 64 million data points to identify three major trends:
#1 Global linkages in crisis: Geopolitics weighs onintegration, trade, and investment
Geopolitical tensions are reducing global integration and dampening trade and investment. Goods trade and foreign direct investment as a share of gross domestic product have started to contract. Even the trade in services – previously the strongest performer – is slowing down.
#2 K-shaped globalization: Integration moves in opposite directions
Integration is moving in opposite directions in different parts of the world. Economists describe this as a "K-shaped" trend. China and countries in the Global South are forming stronger linkages with each other. Meanwhile, the United States is leading the retreat in the West, with higher tariffs and lower levels of political cooperation resulting in looser ties.
#3: Europe recalibrates: Stronger internal integration and new partnerships abroad
In response to weaker transatlantic political alignment and declining trade with China, Europe is pursuing a dual strategy. Within Europe, cross-border trade and investment have grown substantially since 2021. Externally, Europe is reconfiguring its dependencies, strengthening ties with new partners.
“Companies need to prepare for a K-shaped pattern of global integration with diverging dynamics. Especially, highly integrated global companies may face disadvantages in managing differing risks and opportunities in a more splintered world.”
Dr. Alexander Börsch
Chief Economist & Director Research
Authors: Dr. Alexander Börsch and Samuel Günther, Deloitte Economic Research
In dieser Folge widmen wir uns den Aussichten für die Globalisierung und wie sie durch die Geopolitik verändert wird. Unser Moderator und Chefvolkswirt von Deloitte Deutschland, Alexander Börsch, wechselt dafür auf die Gästeseite und wird vom Schweizer Co-Host Michael Grampp interviewt. Anlass für das Gespräch ist eine neue Deloitte Studie von Alexander als Autor im Kontext der kürzlich stattgefundenen Münchner Sicherheitskonferenz.
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Prior editions
2025:
The new rules of globalization
Geopolitical clusters and the fragileresilience of global trade
