He affirms that the pandemic and the conflict in Ukraine “have increased skepticism about the advantages of globalization”, which is why the world economy is moving towards “financial regionalisation”.
The fragmentation of the global economy can cause global GDP to fall by 7%, but in the event of technological decoupling, some economies may lose between 8% and 12%, according to the International Monetary Fund (IMF) report. published on January 15, quoted by Reuters.
According to the report, deepening trade ties led to a reduction in global poverty, favoring low-income consumers in advanced economies through lower prices. However, the covid-19 pandemic and the conflict in Ukraine “have increased skepticism about the advantages of globalization”, so that the world economy is moving towards “financial regionalization” and the fragmentation of the global payment system.
In addition, economic fragmentation “may lead to greater economic volatility, more serious crises, and increased pressure on national reserves,” as well as weakening the international community’s ability to support countries in crisis and complicating the resolution of potential debt crises. . As for the end of trade ties, this “would affect low-income countries more negatively and less rich consumers in advanced economies.”
Source: RT
