Geoeconomic Intelligence: How Small States Build Early‑Warning Systems Without Spying
1. Why geoeconomic early warning has become a core function of the state
Small states do not have the luxury of confusing “international” with “external”. For them, the world economy is not a backdrop; it is the operating environment. Their exposure is structural: a narrower production base, higher openness, and—often—an outsized dependence on imported energy, food, intermediate goods, and finance. The World Bank’s own framing is blunt: small populations and narrow economic bases make small states particularly vulnerable to external shocks, including commodity price fluctuations and economic crises [World Bank Small States]. (World Bank)
The uncomfortable point is that many of the shocks that matter most to small states are not dramatic in the way films teach us to expect. They arrive as a sequence of small degradations: freight rates that stop behaving, insurance premia that quietly widen, a shipping lane that becomes “temporarily unattractive” for reasons no one wishes to define too loudly, a regulatory standard that turns a previously acceptable export into an administrative headache. By the time the shock is obvious, the policy space has already narrowed.
That is why “geoeconomic intelligence” deserves to be treated as a board‑level capability rather than an academic curiosity. It is the disciplined practice of sensing material changes in the external environment—trade policy, capital flows, supply constraints, sanctions risk, chokepoint fragility, and strategic dependencies—early enough to make choices rather than merely absorb consequences. In a world where shipping carries around 80% of the volume of international trade in goods [UNCTAD Review of Maritime Transport – topic page], a disruption in maritime routes is not a sectoral inconvenience; it is macroeconomics by other means. (UN Trade and Development (UNCTAD))
The temptation, when one says “intelligence”, is to assume clandestine collection. This is precisely the wrong mental model for small states. Their comparative advantage is not secrecy; it is agility. A well‑run small administration can notice a weak signal, decide quickly, and coordinate across agencies with fewer layers of institutional theatre. The relevant question is therefore not “How do we spy?” but “How do we see clearly—using what is lawful, auditable, and increasingly abundant?”
2. Intelligence without espionage: drawing the boundary on purpose
The simplest definition worth keeping is this: espionage is the covert acquisition of non‑public information in ways the target would not consent to; geoeconomic intelligence (for a small state) is the conversion of lawful, available information into timely judgement. The distinction is not merely ethical—though it should be—but practical. Policy that cannot survive an audit is rarely resilient. Procurement, data‑sharing agreements, and international partnerships all become harder when the state acquires a reputation for blurred lines.
The good news is that early warning rarely requires secrets. Most systemic disruptions leave footprints in public or commercial data long before they appear in official communiqués. The IMF‑FSB Early Warning Exercise, created at the request of the G20 after 2008, is explicit that early warning is about identifying vulnerabilities and low‑probability, high‑impact risks—not “predicting crises”—and it draws on market information alongside analysis and expert judgement [IMF Early Warning Exercise Factsheet]. (IMF)
For small states, the “no spying” constraint can be reframed as a design advantage. If you build an early‑warning system using sources that are open, contractable, and reproducible, you gain three things that clandestine collection often corrodes: institutional trust, methodological continuity (systems survive personnel changes), and the ability to share the diagnosis with partners without awkward conversations.
What, then, is the lawful substrate? It includes official macroeconomic data, trade and shipping statistics, price and futures markets, corporate disclosures, regulatory publications, sanctions lists, and commercial risk analytics. None of these is exotic. The sophistication lies in integration—turning disparate signals into a coherent picture that speaks to decisions.
3. The board’s risk map: where geoeconomics actually bites
Many early‑warning efforts fail because they try to monitor “everything” and end up monitoring nothing in particular. A small state needs a risk map that is brutally functional: it should be organised around channels through which external shocks become domestic constraints.
First, trade and logistics fragility. The recent shipping environment illustrates the point. UNCTAD notes that after 2.2% growth in maritime trade in 2024, growth was expected to slow to 0.5% in 2025, amid political tensions and reconfigured routes [UNCTAD Review of Maritime Transport 2025; UNCTAD news release, 24 Sep 2025]. By May 2025, tonnage through the Suez Canal remained around 70% below 2023 levels, and UNCTAD flags the Strait of Hormuz—accounting for roughly 11% of maritime trade and over a third of seaborne oil exports—as a focal chokepoint risk [UNCTAD Review of Maritime Transport 2025 (Overview); UNCTAD news release].
Those are not merely “shipping” statistics. They translate into import prices, delivery times, and working‑capital demands for firms—often with inflationary consequences. UNCTAD’s 2024 analysis is unusually specific: by mid‑2024, the Shanghai Containerized Freight Index had more than doubled from late 2023; if sustained, higher shipping costs were projected to lift global consumer prices by about 0.6% by 2025, and by around 0.9% for small island developing states, with processed food costs rising even more [UNCTAD Review of Maritime Transport 2024]. (UN Trade and Development (UNCTAD))
Second, commodity and energy price regimes. Even when inflationary pressures ease, volatility itself is a policy problem; it destabilises expectations and complicates fiscal planning. The World Bank’s Commodity Markets Outlook (October 2025) projected global commodity prices falling 7% in both 2025 and 2026, with energy prices forecast to fall 12% in 2025 and 10% in 2026; Brent was forecast to move from an average of $68 in 2025 to $60 in 2026 [World Bank Commodity Markets Outlook, Oct 2025]. The same release highlights how, in periods of uncertainty, safe‑haven dynamics can dominate: gold was expected to rise sharply in 2025 (with forecasts of further gains) [World Bank Commodity Markets Outlook, Oct 2025]. (World Bank)
Third, financial spillovers and external funding conditions. Small states tend to experience global liquidity as weather rather than climate: it changes quickly and with little regard for local virtue. BIS data show global cross‑border bank credit expanded by $917 billion in Q2 2025 to reach $37 trillion, with year‑on‑year growth around 10% [BIS International Banking Statistics and Global Liquidity Indicators, end‑June 2025]. When that tide turns, rollover risks, FX pressure, and domestic credit tightening can follow—often before the public narrative catches up. (Bank for International Settlements)
Fourth, policy coercion and regulatory shocks. Economic coercion is rarely announced as such. It arrives via tariffs, export controls, procurement exclusions, port fees, standards, and compliance regimes that restructure incentives. The WTO’s Global Trade Outlook and Statistics (April 2025) emphasised how tariffs and trade policy uncertainty can materially affect trade volumes and forecasts [WTO Global Trade Outlook and Statistics, Apr 2025]. Meanwhile, the IMF has framed “geoeconomic fragmentation” as a policy‑driven reversal of integration with meaningful output losses under severe scenarios [IMF Finance & Development, June 2023].
A board‑usable risk map does not treat these as separate silos. Shipping disruptions affect commodity delivery costs; commodity regimes shape inflation; inflation shapes rates; rates shape capital flows; and capital flows determine whether the state can finance buffers. Geoeconomics is not a separate category of risk. It is the wiring between categories.
4. The data estate: building a lawful early‑warning stack from public signals
The modern state is surrounded by data; the problem is that it is surrounded unevenly. A useful early‑warning stack is not “big data”; it is the right data, arranged to answer the questions that matter under time pressure.
Start with disclosure discipline. One of the least glamorous but highest‑return investments is simply making your own data credible, timely, and comparable. The IMF’s data dissemination standards—e‑GDDS, SDDS, and SDDS Plus—are designed precisely to improve transparency and timeliness, and the IMF notes that implementing e‑GDDS or moving to SDDS has been associated with reductions in sovereign spreads (in other words, transparency is rewarded) [IMF Standards for Data Dissemination Factsheet, updated April 2025]. A small state that treats statistical capacity as a strategic asset is not doing public relations; it is lowering its cost of capital. (IMF)
Then add external macro and financial indicators. IMF flagship products (WEO, GFSR, Fiscal Monitor) provide baseline global conditions and risk narratives; for 2025–26 the IMF described an environment of volatility, uncertainty, and protectionism, with growth projections subdued [IMF World Economic Outlook, Oct 2025]. BIS releases add a distinct lens: they show where cross‑border credit is expanding, in which currencies, and through which counterparties [BIS International Banking Statistics, end‑June 2025]. These are not “forecasting” tools; they are early‑warning thermometers. (IMF)
Trade and supply chain visibility comes next. For goods, UN trade statistics and customs‑derived datasets allow a small state to measure concentration risk (supplier dependence, route dependence, and product criticality). But to understand exposure properly, gross trade is not enough; the value‑added content and upstream dependencies matter. The OECD’s Trade in Value Added (TiVA) approach exists for that reason: it estimates the value added by each country embedded in production chains, offering policy insight that conventional trade measures can obscure [OECD TiVA overview]. (OECD)
Shipping and logistics signals are now first‑class indicators. UNCTAD provides data on freight rates, route disruptions, and connectivity; its reporting has linked freight rate surges to prospective inflation impacts, with a disproportionate effect on SIDS [UNCTAD Review of Maritime Transport 2024]. It has also documented the geometry of disruption—longer routes, higher ton‑miles, and chokepoint sensitivity [UNCTAD Review of Maritime Transport 2025]. A small state that monitors shipping costs and transit patterns is not indulging in maritime trivia. It is monitoring the transmission mechanism of inflation. (UN Trade and Development (UNCTAD))
Energy transition dynamics require their own channel. The IEA’s Global Energy Review 2025 reports that global energy demand grew 2.2% in 2024, with electricity demand rising 4.3%; renewables accounted for the largest share of growth in energy supply [IEA Global Energy Review 2025]. These trends matter for small states because electricity systems, fuel import bills, and decarbonisation commitments are increasingly tied to global technology supply chains and financing conditions. (IEA)
What makes all of this “intelligence” is not possession. It is curation: selecting a small set of indicators that explain the state’s vulnerability profile, updating them with discipline, and interpreting them with institutional memory.
5. Analytics that serve decisions: from dashboards to tail‑risk thinking
A dashboard is not an early‑warning system; it is a way of postponing an argument. The analytical layer must answer the question that senior decision‑makers actually have: “If this continues, what breaks first—and when do we act?”
The IMF’s work on early‑warning systems is instructive precisely because it treats forecasting as a tool, not a theatre. IMF technical guidance notes that early‑warning systems have long been part of surveillance, drawing on both traditional econometric approaches and signal‑extraction methods [IMF Technical Notes and Manuals, 2021]. The practical implication for a small state is to combine two approaches: (i) signals—threshold‑based indicators that trigger structured attention; and (ii) scenarios—plausible narratives that are stress‑tested through fiscal, external, and financial channels. (IMF)
A sensible architecture looks like this in practice.
First, define “decision triggers” before choosing models. For a small state, triggers tend to cluster around a few constraints: reserve adequacy, import financing, energy supply continuity, food price pass‑through, and external funding. The indicator set should therefore include freight rates, commodity prices, cross‑border credit conditions, sovereign spreads, and key partner‑country demand proxies. The point is not precision; it is earlier attention.
Second, incorporate concentration and network analysis, not just averages. Averages calm people down. Concentration wakes them up for good reason. The OECD’s Supply Chain Resilience Review stresses that resilience is built through risk management rather than retreat from trade, and it notes that import concentration is rising even as trade remains broadly diversified [OECD Supply Chain Resilience Review 2025]. This supports a practical policy insight: the relevant exposure is often in the tails—single suppliers, single routes, single compliance regimes—rather than in the headline trade‑to‑GDP ratio. (OECD)
Third, separate “baseline monitoring” from “tail‑risk rehearsal”. The IMF‑FSB Early Warning Exercise is explicit that it focuses on tail risks and vulnerabilities rather than predicting crises [IMF Early Warning Exercise Factsheet]. A small state should mirror this separation. The baseline system runs continuously; the tail‑risk process runs quarterly or semi‑annually and forces the institution to articulate uncomfortable contingencies: a prolonged route disruption, a sudden tightening in global liquidity, a commodity price spike, or a sanctions‑adjacent compliance shock. (IMF)
Finally, treat model outputs as prompts for judgement, not substitutes for it. BIS research on early‑warning indicators of banking crises has shown the value of credit and cross‑border credit measures in signalling vulnerabilities [BIS Quarterly Review, March 2018]. The lesson is not that one indicator rules them all; it is that certain variables behave as reliable “pressure gauges” across episodes. Small states should therefore prioritise indicators that have a history of moving early, even if they are unfashionably simple. (Bank for International Settlements)
6. Institutional design: the “fusion cell” model, minus the drama
Even the best data architecture fails if it has nowhere to land. Small states, in particular, often suffer from a polite fragmentation: the central bank watches markets, the finance ministry watches the budget, the trade ministry watches access, the port watches throughput, and nobody owns the synthesis.
A practical design pattern is the geoeconomic fusion cell: a small, analytically strong unit that sits close enough to power to matter, but with a mandate narrow enough to avoid bureaucratic sprawl. It does not replace line ministries. It provides integration, escalation, and rehearsal.
Governance matters more than organisational charts. The fusion cell needs an agreed escalation protocol: when does an indicator breach require a ministerial briefing rather than a memo? It also needs legitimacy with data owners, which is mostly a matter of reciprocity: units that share data must receive useful analysis back. This is where small states can outperform larger ones; reciprocity is easier when you can get everyone in one room without hiring a conference centre.
The technical foundation should follow the logic of auditable intelligence.
Data sources should be classified not by secrecy, but by provenance and permissions: official public statistics; licensed commercial datasets; confidential but voluntarily shared private‑sector information (under contract and with privacy safeguards); and partner‑provided information (under MoUs that specify use and retention). This matters because “without spying” is not a slogan; it is a governance requirement. If you cannot explain where a number came from, you should hesitate before letting it drive policy.
This is also where the IMF’s data standards logic becomes more than technocratic. Timely national data dissemination, aligned with recognised standards, improves policy credibility and can reduce borrowing costs [IMF Standards for Data Dissemination Factsheet]. For a small state, credibility is itself a buffer; it slows capital flight and buys time. (IMF)
7. Mauritius as an illustration: early warning for a small, open, services economy
A useful case illustration is Mauritius, not because it is uniquely exposed, but because it is recognisably the kind of small, open economy whose prosperity depends on external conditions behaving tolerably.
In its 2025 Article IV consultation, the IMF reported that Mauritius grew 4.7% in 2024, with inflation contained; the current account deficit widened to 6.5% of GDP in 2024, reflecting higher imports and freight costs, while gross foreign reserves increased to about US$8.5 billion by end‑2024, covering close to 12 months of imports [IMF Mauritius Article IV, 18 Jun 2025]. This is precisely the profile that makes early warning valuable: robust performance coexists with exposure to freight costs, external demand, and import prices. (IMF)
What would a “no spying” early‑warning lens look like in such a context?
It would begin with shipping and freight as a first‑order macro variable. When UNCTAD documents that tonnage through the Suez Canal remained dramatically below 2023 levels into 2025, and that route changes have increased ton‑miles and freight volatility, the implication for an import‑dependent island economy is immediate: landed costs rise, delivery times lengthen, and inventory financing needs increase [UNCTAD Review of Maritime Transport 2025; UNCTAD news release]. For Mauritius specifically, the IMF’s note that the current account deficit widened partly due to freight costs is an empirical reminder that logistics is not merely operational; it is external balance [IMF Mauritius Article IV, 18 Jun 2025]. (UN Trade and Development (UNCTAD))
It would then layer commodity regimes as fiscal‑monetary inputs. The World Bank’s October 2025 projections of falling energy prices and easing food prices can be read as benign for inflation, but not necessarily benign for fiscal planning, especially where subsidies, excise adjustments, or administered prices are part of the toolkit [World Bank Commodity Markets Outlook, Oct 2025]. The same report flags geopolitical tensions and potential sanctions as upside risks to oil prices—exactly the sort of tail‑risk clause that belongs in scenario rehearsals rather than footnotes [World Bank Commodity Markets Outlook, Oct 2025]. (World Bank)
Next comes global energy transition momentum, which increasingly shapes both costs and opportunities. The IEA’s finding that electricity demand growth is outpacing overall energy demand, with renewables meeting most incremental demand, is not just a climate story; it is an industrial and infrastructure story [IEA Global Energy Review 2025]. For a service‑oriented economy, reliable and competitively priced electricity becomes part of external competitiveness, while the supply chains behind renewables, grids, and storage become geoeconomic dependencies in their own right. (IEA)
Finally, it would incorporate external financing weather. BIS evidence that cross‑border bank credit reached $37 trillion and was expanding rapidly in 2025 is useful not because Mauritius (or any small state) can control it, but because it can monitor the tide [BIS International Banking Statistics, end‑June 2025]. When global liquidity conditions tighten, small economies feel it in spreads, rollover terms, and sometimes in sudden stops in specific corridors. Early warning is about noticing the corridor‑level tightening before it becomes a country‑level panic. (Bank for International Settlements)
None of this requires clandestine collection. It requires the state to treat external signals as strategically material, and to integrate them into fiscal, monetary, and contingency planning.
8. The behavioural problem: why the signal is usually visible, yet still missed
The technical challenge of early warning is solvable. The behavioural challenge is perennial.
Senior teams often mis-handle early warning for three reasons. First, they confuse information with action: if a dashboard exists, they assume the problem is “covered”. Second, they are prone to what might be called narrative inertia: once a comfortable story is in place (“shipping normalises”, “prices mean‑revert”, “markets are liquid”), contradictory signals are treated as noise. Third, they under‑invest in rehearsal. A scenario that has not been rehearsed is, operationally, a surprise—no matter how often it has been discussed.
This is where the IMF’s framing of the Early Warning Exercise is quietly helpful: it is not a prediction machine; it is a discipline for identifying vulnerabilities and risk‑mitigating policies, often requiring cooperation [IMF Early Warning Exercise Factsheet]. The emphasis on vulnerability rather than prophecy matters because prophecy invites complacency (“the model didn’t say it would happen”). Vulnerability invites preparation (“if it happens, we are exposed here, here, and here”). (IMF)
There is also a subtler point. In many small states, the most precious resource is not money; it is senior attention. Early warning is therefore as much about governance of attention as it is about governance of data. The system must be designed to escalate only what matters—otherwise it becomes a machine for producing beautifully formatted irrelevance.
9. Building the capability: a practical sequence that stays lawful and credible
A small state does not need a grand strategy document titled “National Geoeconomic Intelligence Doctrine” (documents like that tend to be read mainly by their authors). It needs a sequence of institutional moves that create capability quickly while staying within clear legal and ethical boundaries.
The first move is to define the state’s external “must‑not‑fail” functions: import financing, energy continuity, food affordability, financial stability, and access to key markets. This keeps the system anchored to outcomes rather than data novelty.
The second is to adopt a small set of “pressure gauges” with agreed escalation thresholds: freight indices and route disruption metrics (UNCTAD), key commodity benchmarks (World Bank commodity outlooks and market data), global liquidity indicators (BIS), and a compact set of partner‑economy demand indicators (IMF/WTO). The value is not the gauges themselves, but the agreement that a breach triggers attention.
The third is to map concentration risk using value‑added logic, not just gross trade flows. OECD TiVA and related inter‑country input‑output work exist because modern dependencies hide inside intermediate goods and services linkages [OECD TiVA overview]. This is how you discover that a “diversified” import basket is, in fact, dependent on a single upstream bottleneck. (OECD)
The fourth is to run semi‑annual tail‑risk rehearsals, explicitly modelled on the logic of the IMF‑FSB EWE: low‑probability, high‑impact scenarios, focused on vulnerabilities and policy options, not on “calling the crisis” [IMF Early Warning Exercise Factsheet]. The output should be a short briefing with decision options, not a novel. (IMF)
The fifth is to institutionalise data governance as a strategic asset. This includes licensing discipline, privacy safeguards, retention policies, and transparent procurement. “Without spying” is maintained not by good intentions but by system design: if the data pipeline is auditable, the organisation is less likely to drift into questionable practices under pressure.
The sixth is to embed the system into fiscal and reserve policy. Early warning that does not alter buffer strategy is essentially journalism. The point is to adjust the macro policy mix, build fiscal space where possible, and design contingent instruments that can be activated quickly. The World Bank’s analysis on small states highlights how external shocks can weaken fiscal positions and raise debt; fiscal resilience is not optional in a shock‑prone world [World Bank Fiscal Challenges in Small States]. (World Bank)
Throughout, a small state should resist the fashionable but costly temptation to “relocalise” everything. The OECD’s supply chain work argues for managing risk rather than retreating from trade; it also notes modelling where relocalisation can come with large economic costs without reliably improving resilience [OECD Supply Chain Resilience Review 2025; OECD Resilient Supply Chains portal]. For small states, which often rely on trade for scale, a strategy of blanket retreat is usually a strategy of self‑imposed constraint. (OECD)
10. Conclusion: strategic autonomy for the sensible
Geoeconomic intelligence, done properly, is not about paranoia. It is about reducing surprise.
The world economy is adjusting to greater policy uncertainty and fragmentation pressures, with trade and industrial policy increasingly entangled with security considerations [IMF World Economic Outlook, Oct 2025; IMF Finance & Development, June 2023]. In that environment, small states can either experience shocks as fate, or treat them as risks that can be sensed, rehearsed, and partially mitigated. The second option is not a guarantee of safety—but it is the difference between managing a disruption and being managed by it. (IMF)
The slightly contrarian conclusion is this: the most effective early‑warning systems rarely feel like “intelligence” at all. They feel like exceptionally competent public administration—statistics that arrive on time, analysts who understand transmission mechanisms, institutions that rehearse unpleasant scenarios, and leaders who are willing to act on weak signals. Spies may enjoy secrets. Cabinets, finance ministries, and central banks generally prefer something less glamorous and more powerful: the earliest possible moment to make a choice.
