The new geopolitical situation following the war in Ukraine raises many questions relating to the future of global trade and globalisation more broadly. Economists at Danske Bank envision three possible longer-term geopolitical scenarios and how these could affect the global economy.

A new cold war

“This is an extreme scenario where world powers form two competing blocs: an eastern group led by China (with Russia) and a Western alliance rallying behind the US. Winners: Defence, commodities, green transitioning, sectors providing near-sourcing technologies. Losers: Globally orientated manufacturing and services companies, shipping companies, housing market (lower growth, higher interest rates).”

Limited deglobalisation and spheres of interest 

“We consider a limited de-globalisation with strengthening spheres of interest as the most likely outcome, and hence, our base case scenario. Winners: Tech and digital (robotics), domestic-focused service companies. Losers: Global manufacturing companies (need to set up regional hubs), housing market (higher interest rates).”

A return to globalisation

“This scenario would involve the trade tensions in recent years between China and US being resolved and also a re-integration of Russia into the global economy on the back of a peace deal between Ukraine and Russia. Winners: Global service sector and manufacturing, shipping companies, housing markets (lower rates). Losers: Defence.”