IMF: Fragmentation could shave up to 7.0% off of global GDP

Dhwani Mehta FXStreet

In a new staff report published on Sunday, the International Monetary Fund (IMF) said that a severe economic fragmentation of the global could cost global Gross Domestic Output up to 7.0% but the losses could reach 8-12% in some countries if technology is also decoupled.

Additional takeaways

“Even limited fragmentation could shave 0.2% off of global GDP, but said more work was needed to assess the estimated costs to the international monetary system and the global financial safety net (GFSN).”

"The COVID-19 pandemic and Russia’s invasion of Ukraine have further tested international relations and increased skepticism about the benefits of globalization.”

The unraveling of trade links "would most adversely impact low-income countries and less well-off consumers in advanced economies.”

Market reaction

The above report has little to no impact on the market sentiment, reflective of the 0.20% gains in the US S&P 500 futures.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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