The imposition of trade restrictions and industrial policies by major economies has further impeded international trade growth. Global goods exports contracted by 4.3% in 2023, according to the World Trade Organization (WTO). In contrast, smaller economies like Mexico and Thailand built resilience in their overall goods exports, having benefited from increased exports to the US, a major end-market as well as attracting foreign direct investment (FDI) for component supply from China. Thailand, Indonesia, and India have similarly attracted significant investment from companies in Singapore, Japan, Korea, and Europe seeking to reduce their dependence on China. Due to heightened geopolitical risks in Western markets, Chinese companies made substantial investments in Asia, accounting for approximately 80% of its outward FDI in 2023.

Enhancing economic resilience for smaller economies involves increasing their attractiveness to foreign investors and ensuring export competitiveness. By strategically investing in trade infrastructure and innovation, and diversifying their trade networks, these economies can attract foreign investments and maintain resilience despite facing disruptions caused by geopolitical tensions.