Market Volatility is one of Euromonitor International’s five new Trending Topics for the year ahead. We have identified these topics as the most crucial cross-industry trends that businesses need to prioritise to remain competitive.
Global markets are increasingly volatile amid trade disputes, geopolitical tensions, and climate change. If a pessimistic Trump tariff scenario materialises, global real GDP growth could be slashed by 2.8 percentage points during 2026-2027 from the baseline. Managing risks and building resilience is imperative for businesses now, while agile pricing actions and innovation are key to unlocking new opportunities. Targeting high-growing emerging markets can help boost volume growth and diversify supply chains.
Tariffs, geopolitical tensions and climate change are driving market volatility
Economic uncertainty has surged since US President Trump’s return to office in January 2025, driven by various shifts in trade and other policies. Despite some progress on trade deals, persistent uncertainty surrounding US trade policy and the risk of an intensified global trade war remain concerns. Meanwhile, ongoing geopolitical tensions, including the war in Ukraine and the Israel-Iran conflict, pose persistent risks to commodity prices and global supply chains. Climate change also adds to the uncertainty, as extreme weather conditions can affect commodity supply. The economic outlook is therefore highly uncertain, with unstable prices and fractured trade.
Short- and medium-term growth prospects remain uncertain and increasingly divergent across key markets, particularly between developed and developing economies. The global economy is expected to slow down from a 3.3% growth rate in 2024 to 2.9% in 2025, with the outlook remaining fragile and exposed to multiple risks, including fluctuations in Trump policies. Consumer sentiment in the US and Europe may deteriorate further due to slower economic growth and rising recession risk, leading to more cautious and value-driven spending behaviour.
Trade and tariff volatility underlines the need to future-proof supply chains
A changing global trade landscape and uncertainty over the future of US trade policy threaten to derail global supply chains. In a worst-case scenario, new US tariffs could cost US companies up to USD1.2 trillion and raise the cost of B2B components by as much as 20%. Such developments would place additional strain on corporate financials and accelerate the reconfiguration of global production networks.
In response, companies are putting greater emphasis on supply chain security over cost alone. This will continue to support production diversification, reshoring efforts and drive investments in automation and digital tools that help to improve operational efficiency. For example, following tariff announcements in March 2025, Hyundai Motor Corp committed USD21 billion to US onshoring efforts, aimed at both avoiding future tariffs and strengthening its supply chain footprint in the US.
Agile pricing and alternative sourcing emerge as key responses to cost volatility
Price pressures remain uneven and risks are rising across markets, making it increasingly difficult for businesses to manage pricing strategies effectively. Lower energy prices and weakening demand since early 2025 have helped ease inflationary pressures, but higher tariffs and ongoing supply chain disruptions are driving up costs, particularly in the US. Additionally, climate-related shocks are contributing to commodity price spikes, as seen with cocoa and orange prices since 2024.
In 2025, the global beverages price index is projected to reach 216 (2010=100), up from 176 in 2024
Source: Euromonitor International
As cost pressures persist amid slowing growth, operational efficiency will remain a top priority for businesses in the short to medium term. To navigate price volatility, companies like Shein and Walmart are adopting tech-driven, agile pricing strategies to protect margins and respond quickly to market shifts. Meanwhile, opportunities are emerging for alternative materials and products that offer more cost-effective and secure supply options.
With economic uncertainty becoming the norm, it should be treated as a trigger for resilience and innovation. To navigate future volatility and turn disruption into opportunity, developing agile response systems — powered by analytics, scenario planning, and deep market and consumer insights — will become even more essential for global companies going forward.
Learn more in our report, Market Volatility: Risks and Opportunities Ahead, and find out about evolving business strategies in times of uncertainty.
Discover Euromonitor’s other Trending Topics to help you strategise for the year ahead.
