IMF: Severe fragmentation could significantly reduce global economic output

IMF: Severe fragmentation could significantly reduce global economic output

IMF Severe fragmentation could significantly reduce global economic output

world trade

The IMF shows the possible consequences of a fragmentation of the global economy.

(Photo: imago/Hans Blossey)

Washington Severe fragmentation of the world economy could reduce global economic output by up to seven percent. This was determined by the International Monetary Fund in a report published late on Sunday. In some countries, gross domestic product could shrink by eight to twelve percent, the report says.

Even with limited fragmentation, global GDP could shrink by 0.2%. Global flows of goods and capital have stabilized since the 2008-2009 global financial crisis and trade restrictions have tightened.

“The coronavirus pandemic and Russia’s invasion of Ukraine continued to test international relations and heightened skepticism about the benefits of globalization,” the report said.

The breakdown of trade ties after decades of economic integration will have a particularly negative impact on low-income countries and less affluent consumers in advanced economies.

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