How rising conflict is reshuffling global supply chains
Research by the Bank for International Settlements shows goods are subject to increasingly complex delivery routes
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THIS week, the world is confronting the horrific human cost of conflict. But as more hellish headlines emerge from the Middle East and Ukraine, economists are also trying to tally the financial cost of this geopolitical fracture.
Take the International Monetary Fund (IMF). As its annual meeting gets under way, it has just released its latest World Economic Outlook (WEO), with the usual analysis of future trajectories for debt, growth and inflation. One novel feature of this year’s WEO is that the word “fragmentation” is cited no less than 172 times; five years ago it was mentioned just once.
No surprise there, perhaps. IMF economists (like global investors) fear that rising strife will undermine growth, not least by shattering global supply chains. “The splintering of countries into blocs that trade exclusively with one another... could reduce annual global GDP (gross domestic product) by up to 7 per cent,” it noted.
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