IMF: world economy at risk of disintegration

In the IMF report titled “Geoeconomic Segregation and the Future of Multilateralism”, it was emphasized that the world economy is at risk of disintegration after decades of increasing global economic integration.

Recalling that the recovery after the global financial crisis of 2008-2009 was followed by Brexit, trade tensions between the US on trade restrictions in the post-crisis period.

In the report, it was noted that the Covid-19 outbreak and Russia’s war in Ukraine have further strained international relations and raised doubts about the benefits of globalization.

Noting that deepening trade ties has greatly helped reduce global poverty, it was claimed that low-income consumers in developed economies benefited through lower prices.

“THE DEEPER THE SEPARATION, THE HIGHER THE COSTS”

In the report, it was stated that low-income countries and low-income consumers in developed countries will bear the brunt of weakening trade relations.

A decline in international cooperation will also pose risks to the provision of vital global public goods, the report said, noting that slowing capital flows will reduce foreign direct investment.

The report noted that decoupling from the global economy could cost between 0.2 and 7 percent of global output.

In the report, which indicated that technological decomposition can significantly increase the loss, it was mentioned that the loss in production in some countries could reach 8 percent to 12 percent with the addition of technological separation. The deeper the divergence, the deeper the costs, according to the report.

Emphasizing that global economic divergence with less international risk sharing could lead to greater macroeconomic volatility, more severe crises, and greater pressures on national shock absorbers, the report also claimed that it could weaken the global community’s ability to support countries in crisis and complicate the situation. resolution of future debt crises. (AA)