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World trade barriers could cost global economy $1.4T: IMF Chief

World trade barriers could cost global economy $1.4T: IMF Chief

Arab Finance: The growing trade barriers against China and other countries over the past year could cost the global economy about $1.4 trillion, Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva told Bloomberg TV on November 20th.

“The world is going to lose 1.5% of gross domestic product just because of division that may split us into two trading blocs. This is $1.4 trillion," Georgieva remarked.

The potential loss for Asia could be double or about over 3% of gross domestic product (GDP) as the region is more involved in the global value chain, she pointed out.

“The single most damaging factor for the world economy is the war," she highlighted, noting that “the sooner the war ends, the better."

She urged Asian countries to join forces in dealing with fragmentation to sustain growth amid unprecedented economic shocks and higher cost of living resulting from the Covid-19 pandemic and Russian-Ukrainian war.

Regarding the ascending risk of sovereign debt in developing countries, Georgieva called the affected nations to take preemptive measures and seek early help from the IMF as nearly 25% of emerging markets trade are in “distressed territory” and about 60% of low-income states are at or near debt distress.

The IMF calculations forecast that almost one-third of the world economy will experience at least two quarters in a row of downtick in 2022 and 2023, with the lost output through 2026 to hit $4 trillion.

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