Asian Markets: Stocks Rise and Fall, COVID-19 Concerns and Geopolitical Tensions Impact Trading (2024)

FAQs

How does the rise in geopolitical tensions affect international trade? ›

On the trade side, increased restrictions due to tensions between countries can disrupt trade flows and cause supply chain problems even in third-party countries. Restrictions can also affect commodity prices and lead to shortages of key resources such as oil and gas, affecting industrial production worldwide.

World merchandise trade decreased by 7.4% in 2020 relative to 2019, and this fall has, naturally, been associated with the pandemic.

Geopolitical conflicts have a significant impact on the world economy, inhibiting the inflow of foreign direct investment (FDI) and hindering domestic economic development. These conflicts can shape global monetary and financial relations, with potential disruptive implications for the global economy.

Despite APEC's presence, poverty rates across Asian economies have increased due to the ineffectiveness of their trade facilitation and economic growth policies. APEC's impact has resulted in an over-reliance on imports among member economies, resulting in weakened local industries and lack of economic diversification.

Financial markets also respond to geopolitical risks usually via the sharemarket both in directly affected countries but also across the major economies because of the impact to confidence. Currencies of impacted countries can often experience a depreciation in response to events as investor uncertainty rises.

Geopolitical risks increase the transaction and security costs of agricultural export trade through the occurrence or threat of geopolitical events such as terrorism and war. Geopolitical events disrupt the trade environment and influence China's agricultural export trade by affecting demand in importing countries.

The U.S. economy lost 23 million jobs at the start of the pandemic, leading to a recession in early 2020. The federal government responded with sharp increases in fiscal spending, and the Federal Reserve lowered interest rates to near zero and kept them there for almost 2 years.

International trade significantly impacts the global economy by stimulating economic growth, fostering technological progress, promoting competition, mitigating economic shocks, and creating jobs.

The average investment ratio before COVID-19 is 1.32% per quarter, and the average level of cash flows is 0.88%. Following the COVID-19 breakout, the investment rate drops to 0.91%, while the average cash flow falls to 0.48%. Moreover, net debt increases from 5.87% pre-COVID-19 to 6.36% during the crisis.

There are many factors that can contribute to geopolitical risks, such as a nation's economic stability, its political relations with other countries, and its military strength.

How does geopolitical tensions affect global supply chains? ›

In the complex world of supply chains, geopolitical shifts are creating disruption, causing ripples across industries. These shifts are affecting the availability, cost, and reliability of essential goods and services worldwide.

According to the Journal Citation Reports, the journal has a 2020 impact factor of 4.117.

There are restrictions that can be a serious obstacle in international trade: export licensing; import licensing; Page 2 trade embargo; import quotas; import duties or other taxes to pay for imported goods; the documentation required for customs clearing of imported goods.

Environmental impacts include air and water pollution from major shipping and freight transportation activities, while nearby community residents (or marine life, in the case of ships) are exposed to diesel particulate matter and noise.

In early 2020, when the coronavirus began impacting communities and industries around the world, international trade ground to a halt almost overnight. Some countries closed their borders, factories shut down to stop the spread of infections and buyers around the world cancelled orders or stopped ordering entirely.

The disruptions of trade flows due to military conflicts leads to changes in economic structures of countries, to the subsequent changes in trade policies, and to the changes of established trade patterns with impact on position of countries in international trade system.

Geography and economy are closely tied together because transport makes trade with widespread areas possible. This is because geographical features include mountains, deserts, and water, which directly impact the movement of people and thus the movement of trade.

Political Factors

Several significant political elements that have an effect on global trade include: Trade policies: Governments establish trade policies, which can either promote or impede global trade. Examples of these policies include tariffs, import quotas, and export subsidies.

Geopolitical risks can significantly impact business operations and profitability. One of the hazards that business must contend with today is geopolitical risk, which has emerged as a critical factor in shaping the global business landscape.