The International Monetary Fund estimates that geoeconomic fragmentation over the next several years could produce a global loss of up to 7% of gross domestic product — or $7.4 trillion — annually, IMF Deputy Managing Director Bo Li told a panel at the SALT iConnections New York 2024 conference on May 20.
“That’s a very, very costly prospect,” Li said. “We also think that kind of fragmentation will also hinder other aspects of our global economy, including our climate solution.”
Pointing to an analysis conducted by the financial agency, he noted that the fragmentation of trade in critical minerals — including lithium and copper — could reduce the world’s investment in renewable energy and electric vehicles “by up to 30% by 2030.”
But when it comes to promoting economic cooperation, Li said multilateralism still works, pointing to the agency itself, whose parent organization is the United Nations.
The IMF Resilience and Sustainability Trust — which helps developing and emerging market countries with their climate transition — has seen investors from all over the world come together. As of May 10, the trust has received $45.3 billion in total pledges, and has received $41 billion in contributions from countries including China, Qatar and the United Kingdom.
Calling it “the right platform,” Li said the trust has united countries to “try to tackle the climate crisis together — because it’s a common challenge we face.” The kind of fidelity and trust shown in this effort is something that cannot be taken for granted, he added.
"We need to continue to think about voice (and) representation,” Li said. “Think about governance. Think about evenhandedness, and we are working very hard to continue to earn that trust.”
