The International Monetary Fund has warned of global economic fragmentation as a result of Russia’s invasion of Ukraine, saying undoing decades of integration would make the world poorer and more dangerous.
Nations need to lower trade barriers to reduce deficits and lower prices, after more than 30 countries restricted trade in food, energy and other key commodities, said IMF Director Kristalina Georgieva.
Georgieva made the remarks in a blog post with Gita Gopinath, the fund’s first deputy director, and Ceyla Pazarbasioglu, head of the strategy, policy and review department, ahead of the World Economic Forum in Davos, Switzerland this week.
Countries need to diversify imports to secure supply chains and reduce production losses through outages, they said. The group of 20 largest economies should also improve their common framework for dealing with debt restructuring to help deal with vulnerabilities, the officials wrote.
“The cost of further disintegration would be enormous in all countries,” she said. “And people at every income level would be hurt – from high-paid professionals and middle-income factory workers who export, to low-paid workers who depend on food imports to survive. More people will embark on dangerous journeys to seek opportunities elsewhere .
Bloomberg Economics last week published the results of a simulation of what an accelerated reversal of globalization might look like in the long run. It points to a significantly poorer and less productive planet, with trade back to levels before China joined the World Trade Organization. An extra hit: inflation would probably be higher and faster.
Ground-border payment systems need to be modernized, with countries working together to create a public digital platform for handling remittances to reduce costs and improve security, IMF officials wrote. And peoples need to work together to confront climate change, they said.
IMF warns of global economic fragmentation of the Ukraine war
Source link IMF warns of global economic fragmentation of the Ukraine war