IMF meetings have exposed the fragmentation of the global economy
The message from last week’s annual meeting of the International Monetary Fund was clear. War, pandemic and rampant inflation have put the global economy under severe strain. The mood was edgy, often fractious.
The Americans had a go at Saudi Arabia for orchestrating production curbs designed to push up the cost of oil. The Indians were unhappy with the aggressive increases in US interest rates, which they saw as exporting America’s problems to the rest of the world.
Britain was in the doghouse for a botched mini-budget that has sent tremors through global financial markets. Russia again made it clear it would veto any attempts by the G20 to condemn it for the invasion of Ukraine. Set up as a body that would encourage the world’s biggest developed and emerging market countries to find solutions to common problems, the G20 could not even agree on a bland communique to sum up its meaningless deliberations.
The moribund state of the G20 matters. It shows a global economy that is fragmenting, with countries responding to the series of recent shocks by looking out for themselves.
There have been examples of solidarity – such as the support for Ukraine – but they are exceptions to the trend. Joe Biden’s decision to restrict the export of US computer chips to China – symbolic of the frosty relations between the world’s two biggest economies – is more typical.
Kristalina Georgieva, the managing director of the IMF, knows there is a problem. The IMF was set up at the Bretton Woods conference in 1944 to end the beggar-my-neighbour policies of the 1930s and to prevent countries exporting deflation. Now she sees signs of deglobalisation. “Fragmentation in the world economy means we might see shifts in supply chains that impact on the
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