Countries must do more to avoid the costly effects of growing global trade fragmentation and help avoid a “second Cold War,” said the managing director of the International Monetary Fund on Thursday.
“I am among those who know what are the consequences of a Cold War: it is loss of talent and contribution to the world,” Kristalina Georgieva said during a press conference at the official start of the World Bank and IMF’s spring meetings.
“I don’t want to see that repeating,” she said, adding that the world should “rationally accept there will be some cost, there will be some fragmentation, but keep these costs low.”
Georgieva grew up in Bulgaria, a former Soviet satellite state.
She believes that multilateral institutions such as the Globe Bank and IMF play a vital role in keeping the globe from splintering into various blocs with catastrophic economic implications.
An IMF analysis released earlier this week warned that increased trade fragmentation caused by events such as Brexit, the US-China trade war, and Russia’s invasion of Ukraine might cause the global economy to shrink by up to 7%.
Policymakers had a crucial role to play to “defend the interests” of their citizens, Georgieva said.
“If we fail to be more rational, then people everywhere will be worse off,” she said.
