The world is witnessing the first signs of fragmentation of the global trading system, the International Monetary Fund’s senior official said.
“There has been an increase in risks to the global trading system and we are seeing early signs of fragmentation,” Gita Gopinath, the fund’s first deputy managing director, said at a news conference in Beijing on Wednesday.
She said that trade across countries that are more geopolitically aligned is holding up better than trade across countries that are less geopolitically aligned.
“If it (decoupling) is done in a more severe form, there’s a more severe form of fragmentation, with actually serious decoupling across blocks, then we could see a loss of global GDP,” Gopinath said.
She added that there is a need to build resilience. “I believe we still have a narrow window to make sure that countries can work together pragmatically to address their relevant concerns,” Gopinath said.