Global investors are once again dusting off studies of the 1930s as fears of protectionism, nationalism and a retreat of globalisation, sharpened by this week’s Brexit referendum, escalate anew.

With markets on tenterhooks over today’s “too close to call” vote on Britain’s future in the European Union, the damage an exit vote would deal business activity and world commerce is amplified by the precarious state of the global economy and its inability to absorb any left-field political shocks.

As such, the Brexit vote will not be an open-and-shut case regardless of the outcome. Broader worries about global trade, frail growth and dwindling investment returns have festered since the banking shock of 2007/08 and have mounted this year.

Stalling trade growth has already led the world economy to the brink of recession for the second time in a decade, with growth now hovering just above the 2-2.5 per cent level most economists say is needed to keep per capita world output stable.

Three-month averages for growth of world trade volumes through March this year have turned negative compared with the prior three months, according to the Dutch government statistics body widely cited as the arbiter of global trade data.And it’s not a seasonal blip. Last year saw the biggest drop in imports and exports since 2009 and their average annual growth of three per cent over the intervening seven years was itself half that of the 25 years before, according to Swiss asset manager Pictet.

2016 is set to be the fifth sub-par year in row. A study published by the Centre For Economic Policy Research shows this paltry pace of trade growth is also below the 4.2 per cent average for the past 200 years.

Foreign direct investment growth of two per cent of world output is also at its lowest since the 1990s, while the hangover from the credit crunch has seen annual growth rates in cross-border bank lending grind to a halt from some 10 per cent in the decade to 2008.

Parsing the big investment themes of the next five years, Pictet this month highlighted “globalisation at a crossroads” – offering both benign and malignant reasoning and implications. One of these was that trade deceleration was due in part to the inwards reorientation of the world’s two mega economies, the United States and China – the former due to the shale energy boom and the latter’s planned shift to consumption from exports.

Another factor cited was a shift in the world economy towards services and digital activity that is not captured by statistics on merchandise trade. But Pictet had little doubt about what brewing developments could swamp all that – rising nationalism on the far right and left of the political spectrum in Europe and the United States.Britain “threatens to drive a fault line” through one of the world’s biggest free trade blocs, it said, and both presumptive candidates for November’s US presidential election have talked of renegotiating the still-unratified Trans Pacific Partnership binding economies making up 40 per cent of world trade.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.