Page 10 - Policy Economic Report - September 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

information, including readings on labor market conditions, inflation pressures and inflation expectations,
and financial and international developments.

4. Trade policy uncertainty looms over global markets- UNCTAD
Trade policy uncertainty has become a major source of global instability. Sudden shifts in tariffs, subsidies
or restrictions fuel volatility.

Policy changes in one country can send shockwaves across the globe, disrupting suppliers, manufacturers
and markets. The United States’ recent policy shifts illustrate this. As the world’s largest importer, even
modest changes reshape supply chains and alter global trade flows.

For decades, multilateral and regional agreements discouraged abrupt shifts and stabilized flows, with
uncertainty mostly limited to episodes like Brexit, COVID-19 or US–China trade tensions. But in 2025, with
weakened rules and fierce competition for critical raw materials, uncertainty has soared to record levels.

The cost of unpredictability

Trade policy uncertainty weighs on the global economy in three key ways.
• Higher costs, slower growth. Companies must carry excess inventory, hedge against losses and
reconfigure supply chains, raising costs and discouraging investment.

• Risks to financial stability. Sudden shifts unsettle exchange rates and weaken investor
confidence, capital flows and credit conditions.

• Erosion of trust. Weaker rules and unilateral actions fuel retaliation, making global cooperation
harder.

Figure 5: Trade Policy shifts global uncertainties

Source- OECD Page | 9

September 2025