The WEF warns that global economic fragmentation is costing up to $300 billion
“In a scenario of escalation, losses could reach $6.9 trillion, equivalent to 6.4% of global GDP – more than the entire economy of any country except the US and China,” states the World Economic Forum’s report ‘Deepening Divides’
The period 2025–2026 marked “a turning point for global trade and finance”, with economic and financial fragmentation set to cost the global economy between $213 billion and $307 billion a year under the main scenario – a situation that no longer concerns only traditional geopolitical ‘rivals’ but is driving a wedge between traditionally allied economies such as the US, the EU, Canada, Japan and South Korea. This is stated in the ’Deepening Divides’ report by the World Economic Forum, according to which geo-economic fragmentation, in addition to its impact on GDP, adds 0.2–0.3 percentage points to global inflation.
“In an escalation scenario, losses could reach $6.9 trillion, equivalent to 6.4% of global GDP – more than the entire economy of any country except the US and China,” the report states. In an extreme scenario, countries outside the main geopolitical blocs, particularly emerging economies, would suffer declines of 10.7%, compared with a global average of 6.4%. Fragmentation also erodes purchasing power, with the US among the hardest hit in terms of real wages. The report by the association that organises the Davos meetings proposes five measures to limit the damage: stricter rules for economic governance, a more predictable political climate and greater interoperability between payment systems and digital currencies.
