Global economic disintegration could cause 12% loss in some countries

The International Monetary Fund (IMF) said that global economic output losses could reach 8-12% in some countries due to severe disintegration of the global economy. The IMF said that more work was needed to assess the estimated costs to the international monetary system and the global financial safety net (GFSN). The IMF said existing studies suggested that the deeper the fragmentation, the deeper the costs, with technological decoupling significantly amplifying losses from trade restrictions. Emerging market economies and low-income countries are likely to be most at risk as the global economy shifts to more “financial regionalization” and a fragmented global payment system. It said that with less international risk-sharing, global economic fragmentation could lead to higher macroeconomic volatility, more severe crises, and greater pressures on national buffers.