Low inflation in the decades before the COVID-19 pandemic has often been attributed to globalization, so it would be natural to think the oppositethat less international trade, particularly with China, might lead to higher inflation. However, our latest Megatrends researchOpens in a new tab suggests that the impact of slowing globalization on inflation will be modest.
It’s a compelling narrative: The low inflation that we’ve seen for most of the past 30 years has been a consequence of lowered trade barriers thanks to the ratification of the North American Free Trade Agreement (NAFTA) in 1993 and China joining the World Trade Organization (WTO) in 2001. The ready availability of cheap imports from China has largely driven the narrative.
Given today’s geopolitical tensions and rising trade barriers, it’s understandable if some might think that globalization is in full reverse and that…
