Have you noticed more turbulence in global trade lately? We have too, and the World Trade Uncertainty Index (WTUI) explains why. This index measures uncertainty in global trade policy by analyzing economic data and major reports. While relatively stable from 2008 to 2017, the WTUI has surged since 2018, reacting to events like Brexit, US-China trade tensions, COVID-19, the Ukraine war, and ongoing geopolitical and economic pressures. For Kiwi business leaders, a high WTUI is a clear signal to reassess risks, strengthen supply chains, and refine strategic positioning.
Understanding the World Trade Uncertainty Index (WTUI)
The WTUI is an economic indicator developed by the International Monetary Fund (IMF) to track global trade-related uncertainty. It uses advanced text analysis of country reports, news, and policy documents to calculate an index reflecting global anxiety around trade policies and practices.
A higher WTUI means businesses and markets face greater uncertainty in international trade. Importantly, it's GDP-weighted, so larger economies have a bigger influence. Think of the WTUI as a key indicator of the global sentiment surrounding trade, investment, and policy confidence.
What Factors Drive WTUI Spikes?
Several major events consistently push the WTUI higher:
Geopolitical conflicts (e.g., Russia-Ukraine war, Middle East tensions)
Trade policy shifts (e.g., US-China tariffs, Brexit impacts)
Global health events and pandemics (e.g., COVID-19)
Disruptions to supply chains (e.g., semiconductor shortages, Suez Canal blockage)
Economic volatility (e.g., inflation, interest rate fluctuations)
These events disrupt the predictability of trade, leading to delays, renegotiations, and the need for businesses to rethink sourcing, pricing, and logistics.
How the WTUI Has Evolved Since 2008
Looking at the trend, the WTUI was remarkably stable below 5,000 from 2008 to late 2017. This period mirrored steady globalization, trade liberalization, and economic recovery after the Global Financial Crisis.
However, since 2018, we've entered a more volatile era:
2018–2019: The US-China trade war caused a significant spike.
2020: The global COVID-19 pandemic led to the highest peak ever recorded (around 27,000).
2022–2023: The war in Ukraine, rising inflation, and interest rate hikes contributed to ongoing volatility.
2024–2025: Increasing geopolitical tensions, global elections, and supply chain fragility have caused another sharp rise.
As of May 2025, the WTUI is nearing record highs again, indicating a period of heightened uncertainty for global trade.
Why the WTUI Matters for Your New Zealand Business
For Kiwi business leaders, executives, and supply chain planners, the WTUI isn't just an abstract number—it's a crucial warning sign for global commerce that directly impacts your operations. Here's what it means practically:
Forecasting becomes more challenging: Market signals are less clear, making budgeting and inventory decisions riskier.
Supply chains face increased pressure: Expect longer lead times, higher costs, and a greater need for local and alternative sourcing.
Costs rise and margins shrink: Uncertainty breeds inefficiency, with delays and price volatility eroding profits.
Diversification is essential: Relying on a single region or supplier is a significant gamble in the current climate.
Agile strategy is key: Long-term planning must incorporate contingency and scenario models to adapt to rapid changes.
What Should Your NZ Business Do Now?
To effectively navigate this era of rising trade uncertainty:
Regularly monitor global indicators like the WTUI: Integrate it into your economic outlook and risk management models to avoid being caught off guard.
Reassess your supply chain risks: Map your tier-1 and tier-2 supplier risks and actively explore local, regional, and digital alternatives.
Invest in resilience: Business continuity plans, backup suppliers, and flexible contracts are no longer optional—they are necessities.
Stay informed and agile: Partner with advisors who closely track geopolitical, economic, and trade trends. The speed of your response is critical.
Final Thoughts for NZ Businesses
The World Trade Uncertainty Index reflects the increasing complexity of operating in a turbulent global landscape.
At Josty, we're here in New Zealand to help businesses like yours interpret economic signals like the WTUI. We aim to transform complexity into clarity and uncertainty into opportunity, right here in our local context.
If your business relies on global supply chains, cross-border transactions, or simply wants to maintain a competitive edge in these uncertain times, now is the time to be proactive.
📊 Need help understanding what trade risk means for your New Zealand business?
👉 Let's talk about developing a resilient trade strategy, robust continuity planning, and future-proofing your business for the global landscape. Contact Josty today for a consultation.
