BANGKOK, Oct. 13 (Xinhua) -- The heads of the International Monetary Fund (IMF) and World Bank warned here on Tuesday that deepening geopolitical and economic fragmentation could hinder global economic growth, urging nations to balance national security priorities with open trade and multilateral cooperation.
Speaking at a panel discussion during the Annual Meetings of the IMF and the World Bank, IMF Managing Director Kristalina Georgieva cautioned that while the global economy has demonstrated surprising resilience against compounding shocks, rising protectionism and the breakdown of international cooperation carry severe long-term costs.
Georgieva emphasized that while early estimates warned fragmentation could cost up to 7 percent of global gross domestic product, the opportunity cost of foregone cooperation is even more concerning, as it highlights the hidden toll of duplicate investments, slowed scientific breakthroughs, and the erosion of cross-border trust.
She warned policymakers against sliding into complacency or retreating into total self-sufficiency, reminding them that sound macroeconomic and financial stability remains the "first line of defense" and that current resilience must not be taken for granted.
World Bank Group President Ajay Banga pointed out that global trade dynamics are undergoing a structural transformation. Over the past two decades, developing economies' share of global trade has doubled from 20 percent to 40 percent, with half of that volume now taking place directly between developing nations rather than flowing strictly to advanced economies.
Banga highlighted that addressing demographic shifts, including 1.2 billion young people entering adulthood across emerging markets over the next 15 years, requires scaling private capital mobilization.
"Public financial circumstances everywhere ... are all stressed," Banga said, noting that governments cannot fund sustainable growth alone.
He called for concerted reforms to de-risk private capital flows through physical and digital infrastructure investments, predictable regulatory frameworks, and robust support for micro-, small-, and medium-sized enterprises, which generate roughly 75 percent of employment globally. ■
