IMF says fragmentation could cost global economy up to 7% of GDP
(VOVWORLD) - A severe fragmentation of the global economy after decades of increasing economic integration could reduce global economic output by up to 7%, but the losses could reach 8-12% in some countries, if technology is also decoupled, the International Monetary Fund said in a new staff report.
 IMF logo in Washington, D.C. (Photo: AFP/VNA) |
The note, released late Sunday, said that the global flow of goods and capital had leveled off after the global financial crisis of 2008-2009, and a surge in trade restrictions seen in subsequent years.
The IMF said existing studies suggest that the deeper the fragmentation, the deeper the costs, with technological decoupling significantly amplifying losses from trade restrictions.
It noted that emerging market economies and low-income countries are likely to be most at risk as the global economy shifted to more “financial regionalization” and a fragmented global payment system. It could also weaken the ability of the global community to support countries in crisis and complicate the resolution of future sovereign debt crises.