Oil prices fell to a two-week low after Israel agreed to a proposed ceasefire with Iran, brokered by U.S. President Donald Trump. While the de-escalation brought a brief sense of relief to global markets, business and political leaders gathering in the Chinese port city of Tianjin for the World Economic Forum’s “Summer Davos” expressed deeper concerns about the broader economic outlook.
Geopolitical tensions between Iran and Israel, which threatened to spiral into a broader regional conflict involving the U.S., temporarily overshadowed long-standing issues such as trade friction, inflation, and sluggish growth. “It is the most complex geopolitical and geo-economic backdrop we’ve seen in decades,” said Børge Brende, President of the World Economic Forum, warning of a potential “decade of lower growth” if global cooperation fails to revive momentum.
The forum, traditionally a champion of free trade and globalization, is taking place amid mounting uncertainty. From U.S. tariffs disrupting global supply chains to the impact of high energy prices on manufacturers and consumers, the challenges facing the global economy are both structural and immediate.
“Businesses now operate in an environment of radical uncertainty,” said Jeffry Frieden, professor of international and public affairs at Columbia University. He noted that the global economic order is undergoing a fundamental shift as companies try to navigate trade wars, disrupted supply routes, and fluctuating demand.
The recent threat by Iran to close the Strait of Hormuz—a vital passage for a quarter of the world’s oil supply—added to market jitters, particularly in China, which imports the vast majority of Iran’s oil. “Anything that disrupts that oil supply is going to be a worry to Beijing,” said Chris Torrens, head of China at advisory firm APCO.
China’s own economy remains under pressure from a prolonged property crisis, youth unemployment, and weak domestic consumption. In response, Beijing has rolled out a range of measures to stimulate growth and remains on track to meet its 5% annual growth target. Economists say China could contribute nearly 30% of global growth this year.
Some observers see a strategic opportunity for China amid the turmoil. “The U.S. is giving China a massive PR opening to position itself as a defender of globalization,” Torrens said. “China still has barriers to market access, but it’s making a strong play to be seen as a global economic leader.”
Meanwhile, attention is turning back to trade. The expiration of Trump’s temporary suspension on reciprocal tariffs looms large. Business leaders at the forum voiced concern over the unpredictability of U.S. trade policy. “It’s very difficult for businesses to make long-term plans,” Frieden said. “You can’t commit to a strategy if you don’t know what tariffs you’ll face next quarter.”
As markets digest the ceasefire and geopolitical tensions ease—at least for now—the long-term uncertainties hanging over the global economy remain far from resolved.
