If technological decoupling (where countries limit tech sharing and collaboration) rises in the world, then some countries will see a 8-12 per cent of GDP loss, the Economic Survey 2025 has stated.
The survey also highlights that if global trade becomes fragmented due to tariffs or geopolitical tensions, the global economy could shrink by 0.2 to 7 per cent
If technological decoupling (where countries limit tech sharing and collaboration) rises in the world, then some countries will see a 8-12 per cent of GDP loss, the Economic Survey 2025 has stated.
Tech decoupling has been gaining prominence recently, especially with regard to the US-China trade war, where both countries have been trying to limit the sharing of technology. For instance, the USA imposed new export restrictions on Nvidia's AI chips to China.
Additionally, the survey has highlighted that if global trade becomes fragmented due to policies such as tariffs, or geopolitical tensions, the global economy could shrink to 0.2 per cent in a limited fragmentation/low-cost adjustment scenario. Further, the loss could reach up to 7 per cent of the GDP (in a high fragmentation/high-cost adjustment scenario).
The survey says, "The overarching impact of such a denouement would mean that as the global economy slows down, global capital tends to look for economies with sustainable growth."
The International Monetary Fund (IMF) has also indicated that now trade fragmentation is more costly than during the time of the cold war. This is because, "unlike the start of the cold war when goods trade to GDP was 16 per cent, now that ratio is 45 per cent," adds the survey.
The survey has also indicated that fundamental shifts are underway with regards to the proliferation of trade and investment restrictions. It adds that between 2020 to 2024, 24000 new restrictions related to trade and investments have been placed worldwide. It adds, "The impact of this shift in global structural forces is reflected in global trade growth, which has slowed down significantly, and signs of secular stagnation in the global economy are beginning to emerge."
The restrictions imposed related to geopolitical concerns, national security, climate change mitigation and more. The survey adds that the global economy is at a crucial point where some ideas and practices are being reassessed and, in some cases also becoming outdated. A major factor in this change is the growing influence of China in supply chain.
The survey adds, "Adding to this shift is China's prominent role in global supply chains, which continues to reshape the economic landscape. As a result, many countries now operate in an environment markedly different from what they were accustomed to, with traditional rules being reconsidered and uncertainty surrounding what might replace them."