Page 9 - Policy Economic Report - August 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Note- The GDP deflator is a price index that measures the average level of prices of all domestically
produced final goods and services in an economy over a given period. It is calculated by dividing the
economy's nominal GDP (GDP valued at current prices) by its real GDP (GDP adjusted for inflation). This
allows economists to determine the extent of price changes, or inflation, impacting the GDP.

Global Trade

• Global trade has shown resilience in the face of persistent shocks, including recent tariff hikes.
Frontloaded imports and improved macroeconomic conditions have provided a modest lift to the
2025 outlook. However, the full impact of recent tariff measures is still unfolding. The shadow of
tariff uncertainty continues to weigh heavily on business confidence, investment, and supply
chains. Uncertainty remains one of the most disruptive forces in the global trading environment.

• Asian economies are projected to remain the largest positive driver of world merchandise trade
volume growth in 2025.

• North America will weigh negatively on global trade growth in both 2025 and 2026, but its
negative impact this year will be smaller than previously estimated due to stronger-than-expected
frontloading of imports in the US in the first quarter.

• Meanwhile, Europe's contribution to trade in 2025 has gone from moderately positive to slightly
negative.

• Other regions, including economies whose exports are largely energy products, will see their
positive contribution to trade growth shrink between 2025 and 2026 as lower oil prices reduce
export revenues and dampen import demand.

• North America's imports are expected to decline by 8.3% in 2025, less than the 9.6% drop
foreseen in the April forecast. This positive impact was matched by a stronger-than-expected
4.9% rise in exports of Asia, up from 1.6% in the previous forecast. Europe's export and import
growth this year of -0.9% and 0.4% respectively will be slightly weaker than predicted in April
while North America's exports will be less negative. (-4.2%).

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