Global Economic Outlook may reduce by 7% -IMF

Global Economic Outlook could reduce by 7% if global economies opt for severe fragmentation after decades of increasing integration, the International Monetary Fund has said.

However, the losses could reach 8-12% in some countries, if technology is also decoupled, the IMF said in a new staff report.

The IMF said 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 note, released late Sunday, noted that the global flows 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 COVID-19 pandemic and Russia’s invasion of Ukraine have further tested international relations and increased skepticism about the benefits of globalisation,” the staff report said.

Reuters/Hauwa Abu