The world is edging towards a “new Cold War” that risks “annihilating” free trade as we know it, the deputy managing director of the International Monetary Fund (IMF) has warned.
Gita Gopinath said “growing fault lines” in the global economy, such as tensions between the US and China and Russia’s invasion of Ukraine, had created permanent shifts in the way countries do business.
Ms Gopinath warned that the “costs of fragmentation” were higher than ever after decades of globalisation brought closer trade links between countries.
The Telegraph says Ms Gopinath fears costs amounting to trillions of dollars if the global economy split into two blocs – one dominated by the US and Europe in the West and the other led by China and Russia in the East.
This risked repeating the decades-long struggle for supremacy between the US and the Soviet Union during the Cold War, which sparked a nuclear arms race.
Ms Gopinath said: “Fault lines are emerging as geo-economic fragmentation is increasingly a reality. If fragmentation deepens, we could find ourselves in a new Cold War.
“The economic costs of Cold War Two could be large. The world has become much more integrated, and we face an unprecedented breadth of common challenges that a fragmented world cannot tackle.”
The UK's flagship share index, the FTSE 100, was up 26-points at 7,571 after early trading this morning, following yesterday's nine-point drop.
Brent crude oil futures were up by 0.76% today, trading at $76.61 per barrel.
Companies reporting today
- Chemring Group - full-year results