As the world moves toward an increasingly bipolar order, the growing divide between U.S.-led and China-aligned blocs is taking a toll on the global economy as trade and investment flows are redirected along geopolitical lines in ways not seen since the Cold War.
After years of shocks, including the COVID-19 pandemic, countries are now “reevaluating their trading partners based on economic and national security concerns,” said Gita Gopinath, first deputy managing director of the International Monetary Fund.
In a speech Tuesday at Stanford University, the IMF official noted that while policymakers’ increasing focus on building economic resilience is not necessarily bad, “we could see a broad retreat from global rules of engagement and, with it, a significant reversal of the gains from economic integration” if the trend continues.