Gita Gopinath says global economy’s fragmentation into power blocs risks wipeout of trillions of dollars in GDP

Title is unfortunate, a bit sensationalist. It’s about the decline of the world’s GDP due to Geopolitical tensions.

"However, depending on economies’ ability to adjust to the new divisions in world trade, losses could reach as much as 7% of world GDP. The fragmentation of foreign direct investment into two blocs centred around the US and China – with some countries remaining non-aligned – could also result in long-term global losses of about 2% of GDP.

  • AutoTL;DR@lemmings.worldBEnglish
    3·
    11 months ago

    This is the best summary I could come up with:

    The world economy is on the brink of a second cold war that could “annihilate” progress made since the collapse of the Soviet Union, a senior International Monetary Fund official has warned.

    Gita Gopinath, the IMF’s first deputy managing director, said the accelerating fragmentation of the world economy into regional power blocs – centred around the US and China – risked wiping out trillions of dollars in global output.

    Warning that the world was at a “turning point” as tensions mounted between the planet’s most powerful nations, Gopinath urged governments to pull back from the brink and work together on shared economic priorities where possible.

    International trade and investment flows have stumbled in recent years amid a breakdown in relations between some of the world’s most powerful economies, with a rise in protectionist policymaking since the 2008 financial crisis.

    Disruption to lengthy supply chains during the Covid pandemic has accelerated the process, amid a wave of “reshoring” and “friendshoring” – firms sourcing key materials from domestic suppliers or those in politically aligned nations.

    Governments are also making billions of dollars available to kickstart domestic economic growth and job creation, while nurturing green industries to combat the climate emergency.

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