Geopolitics For decades, competitiveness was closely linked to global openness and integration. However, the compounding crises of recent years have altered this equation. Strategic agility and resilience are now as critical as openness and efficiency. Geopolitical fragmentation has already begun to reshape global flows and strategies. Even before the latest wave of trade disruptions, governments and businesses were testing their geopolitical muscle as they adapted to a world of diverging rules, rival blocs and growing cross-border frictions. Fragmentation is expected to further accelerate by the end of 2025,14 and about one-third of employers globally expect geopolitical division and conflict to be a key driver of business transformation by 2030.15 A key manifestation of this shift has been a surge in discriminatory industrial and trade policy measures. Since 2022, governments have increasingly deployed tariffs, subsidies, export controls and restrictions on technology transfer to advance geopolitical goals. Nearly 80% of the 5,716 policy measures recorded in this period were discriminatory,16 tilting the global economy towards fragmentation rather than cooperation. This growing geoeconomic assertiveness has contributed to a historically broad-based spike in economic uncertainty.17 The Global Trade Uncertainty Index hit a peak on 10 April (more than 300% above its position at the start of the year).18 The International Monetary Fund (IMF) estimates that such a rise in uncertainty could increase public debt burdens by as much as 4.5% of gross domestic product (GDP), constraining fiscal space as governments face growing demand for investment in security, infrastructure and climate resilience.19 In this volatile landscape, both businesses and policy-makers may be incentivized to prioritize short-term defensive measures. There is a risk of investment being reduced or delayed, resilience being eroded, innovation being delayed and supply chains being disrupted.20 These dynamics could undermine long-term competitiveness by crowding out forward-looking strategies and reducing the capacity to absorb shocks. Geopolitical strategy is now a core business competency. Companies that actively prepare for geopolitical risk (e.g. through supply chain diversification or investment and operational decisions) will be better positioned to navigate uncertainty and seize competitive opportunities. While the direction of future geopolitical developments remains deeply uncertain, it is already clear that competitiveness in this new era will depend not just on economic fundamentals but on the capacity to navigate an increasingly fractured international landscape. Business regulations The regulatory environment is a key structural component of competitiveness. It encompasses the laws, rules and procedures that define how businesses operate and how resources are allocated – spanning areas from business formation to labour and sustainability standards, competition rules, financial oversight, and trade and industrial policy. Well-designed regulations can mitigate market failure, encourage investments, unlock innovation and steer societal progress.21 When regulation is excessive or poorly designed, however, it can raise the cost of doing business, distort market dynamics and stifle innovation.22 Evidence from past regulatory regimes shows that burdensome, anti-competitive regulation can impede long-term growth and prosperity.23 However, these effects are not irreversible. One estimate suggests that removing regulatory barriers can boost labour productivity by nearly 1.3% across developing economies.24 The level of regulatory complexity varies globally. According to the latest World Economic Forum survey of global executives in 2024, compliance is perceived to be easier in Northern America, Oceania and South-eastern Asia, while executives in Latin America and the Caribbean, Southern Asia and Europe report more complexity (see Figure 3). Encouragingly, the overall trend is broadly positive – perceptions of regulatory complexity have improved in 91 out of 115 economies since 2018.25 Strategic agility and resilience are now as critical as openness and efficiency. 9 Global Economic Futures: Competitiveness in 2030

Global Economic Futures Competitiveness in 2030 2025