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UN Report: Strait of Hormuz Disruptions Risk Excluding Small Firms From Global Trade
UN Trade and Development warns small businesses face lasting exclusion if Hormuz disruptions hit.
A new report from UN Trade and Development warns that disruptions in the Strait of Hormuz could have a lasting impact on smaller businesses, potentially pushing them out of global value chains permanently.
The agency said this so-called exclusion effect poses a greater threat to companies that cannot spread costs across multiple suppliers, markets, or lenders. The report estimates that around 90% of the world's businesses are exposed to this risk.
Key dangers for small firms
- Small firms lack the flexibility to absorb sudden cost spikes or reroute supply chains.
- The exclusion effect could persist even after global trade volumes recover.
- Geopolitical disruption in a critical shipping lane hits smaller economic actors disproportionately.
The UN report underlines how a single chokepoint in global shipping can have outsized consequences for smaller players that are less equipped to adapt to sudden shocks.