IMF Deputy Warns of 'New Cold War' Amid Global Economic Fragmentation

Gita Gopinath suggests a potential loss of up to 7% of global GDP if the world splits into US-Europe and China-Russia trading blocs.

IMF Deputy Managing Director Gita Gopinath warns of a potential 'new Cold War' due to increasing economic fragmentation and tensions between the US and China.
Gopinath suggests that the global economy could lose between 2.5% and 7% of its GDP if the world splits into two trading blocs, one led by the US and Europe, and the other by China and Russia.
The IMF official highlights that direct trade links between the world's biggest economies are already being severed, with Mexico replacing China as America's top trading partner.
Gopinath urges countries to protect the basic tenets of free trade, warning that escalating global tensions could threaten net zero or food security.
She also suggests that the current system to resolve trade disputes through the World Trade Organisation is no longer fit for purpose.