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IMF’s Gopinath warns fragmentation of global economy could cut GDP by 7%

IMF’s Gopinath warns fragmentation of global economy could cut GDP by 7%

Reuters Hum News
Dec 11, 2023

gopi imf — FILE PHOTO: First Deputy Managing Director of the International Monetary Fund, Gita Gopinath, attends a panel on the fourth day of the annual meeting of the IMF and the World Bank, following last month's deadly earthquake, in Marrakech, Morocco, October 12, 2023. REUTERS/Susana Vera/File Photo

WASHINGTON: The International Monetary Fund’s No. 2 official on Monday warned that fragmentation in the global economy and clear shifts in underlying bilateral trade could trigger a “new Cold War” given the Ukraine war and tensions between the United States and China.

First Deputy Managing Director Gita Gopinath told the International Economic Association in Medellin, Colombia, that losses could reach 2.5 per cent to 7 per centof global gross domestic product if the world economy fragmented into two blocs.

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“While there are no signs of broad-based retreat from globalization, fault lines are emerging as geoeconomic fragmentation is increasingly a reality,” she said in prepared remarks. “If fragmentation deepens, we could find ourselves in a new Cold War.”