Daily Management Review

IMF: Global economy fragmentation will lower GDP in some countries by 12%


According to Kristalina Georgieva, head of the IMF, some nations could eventually lose up to 12% of their GDP as a result of the global economy fragmentation.

Guillaume SPEURT
Guillaume SPEURT
Over time, fragmentation in commerce alone could cost as much as 7% of the world's GDP. Some nations could lose up to 12% of GDP if technology fragmentation is added to the mix. Another blow to the expansion of the world economy would come from the fragmentation of capital flows, especially foreign direct investment, Ms. Georgieva noted.

The IMF chief expects that the growth of the global economy will slow down to 2.8% in 2023 (from 3.4% in 2022), while it will level off to 3% in 2024, according to the fund's April forecast. This is the IMF's worst medium-term estimate in decades, claims Ms. Georgieva.

She pointed out that the "stubbornly" high core inflation rate, ongoing geopolitical influences on the world economy, and the detrimental effects of economic fragmentation on trade flows are the causes of the bleak outlook.

source: reuters.com