Slowbalisation replaces globalisation as the world economy changes course

Globalisation, once synonymous with boundless progress, is undergoing a profound transformation. In fact, it's almost an about-face. Because ever since the global financial crisis of 2008, we've witnessed a phenomenon now known as 'slowbalisation' - a fusion of the terms 'slow' and 'globalisation' - that signifies a slowdown in globalisation efforts.

One can observe this shift is by tracking the global trade in goods, which is the sum of the world's imports and exports of goods in relation to the global gross domestic product (GDP). While global trade in goods exploded from the 1960s to 2008, this ratio has been trending downward ever since.

Resilience in the face of geopolitical tensions

We believe that slowbalisation, rather than being a temporary phenomenon, reflects a fundamental economic and political realignment. The trend has been reinforced by recent crises like the Covid pandemic, the war in Ukraine, and trade conflict between the USA and China. These events have exposed the vulnerability of global supply chains and demonstrated the importance of strategic products and essential everyday goods.

Companies and countries are reorganising their existing global networks. The realignment of supply chains isn't just about cost optimisation; security of supply is increasingly important. Investment in infrastructure, digitalisation, and automation should ensure that resilient supply chains can be created onshore or close to home markets. However, the price for the higher security is a higher inflation rate.

At the same time, governments around the world are recognising the need to support strategic industries while reducing their dependence on global supply chains. For instance, the EU is subsidising domestic production through initiatives such as the 'Green Deal Industrial Plan' to secure technological sovereignty.

Capitalising on the shift in the global economic order

This type of move signals that geopolitical and national security considerations are as important as economics. Companies in industries as diverse as technology, automotive, and healthcare are repositioning their business models to capitalise on this critical shift in the global economic order.

While it is true that President Donald Trump's 'America First' policy is fuelling slowbalisation, it's important to remember that this trend has been underway for some time. 

Protectionist measures and the withdrawal by the USA and others from international agreements are creating economic blocs, most notably the USA, EU, and China, that are increasingly acting independently of each another.

The need for security and stability 

The trend towards slowbalisation is leading to a rebalancing of global networking and regional autonomy. The lowest-cost production location may not be the most important consideration; rather the need for security and stability is driving many supply chain and manufacturing decisions.

This new focus opens up opportunities for companies to benefit from the relocation of production, the strengthening of local supply chains, and the focus on technological sovereignty. Taking some key industries in turn:

• Defence and cybersecurity: The need to protect critical defence technologies and equipment from import dependency is leading to increased investment in research and development, as well as local production. In view of the growing threat of cyberattacks and the increasing importance of data as a strategic asset, cyber security solutions are also becoming more relevant, leading to investment in local infrastructure and data centres.
• Semiconductors: This industry is particularly dependent on global supply chains, so the focus is on expanding regional production sites. By near- and reshoring, manufacturers are looking to reduce risks arising from geopolitical tensions and to strengthen technological independence.
• Artificial intelligence: The development and application of AI requires large amounts of computing power and access to high-quality data. Governments and companies are investing in local and regional data centres and computing infrastructure to meet demand while ensuring data sovereignty.
• Capital goods, automation, and digitalisation: Because modern manufacturing technologies rely on automation and digitalisation, it is becoming possible to make production more flexible, increase product quality, and reduce costs. Manufacturers of industrial robots and providers of digital twins are seeing increased demand from the onshoring of production and using more flexible, automated production lines.
• Infrastructure: The modernisation of transport, digital networks, and energy supply are the focus of government support programmes, necessary to support regional economic development. Companies operating in these areas benefit from stable orders and long-term partnerships with the public sector.
• Energy and raw materials: With the volatility of international energy markets and more environmental regulation, investments in renewable energies, green technologies, and local raw material extraction are front and centre today. Companies that focus on efficient resource utilisation and environmentally friendly production processes can position themselves as pioneers of change.
• Health: Shorter, regionally organised supply chains enable the faster and more reliable supply of medical products and medicines. Investments in local research facilities and production sites also promote innovation in medical technology and pharmaceutical development. Strengthening regional self-sufficiency can help to avoid bottlenecks in times of crisis and increase security of supply.
• Food: In the food sector, focussing on regional production leads to shorter transport routes, ensuring freshness and quality, while also reducing environmental impact. Many consumers are looking for regional and sustainably produced food, which strengthens local producers, ensures security of supply, and supports a more resilient agricultural economy.

In summary, there's no doubt that slowbalisation benefits sectors that combine local value chains with innovation - whether through automation, resource-efficient production, or digital sovereignty. Companies that actively shape this transformation can not only build crisis resilience, but also act as drivers of a regionally networked, sustainable economy over the long term.