IMF: Geopolitical Fragmentation Threatens Global Economy
The fragmentation of the world both at the geopolitical and economic-commercial levels is indeed “causing alarm and threatening sustainable development.” The warning came from the International Monetary Fund (IMF) that released a report on production and global trade in key commodities, from oil to coffee.
“The economic and trading world is also divided into two large blocs, led by US-Europe and China-Russia, that trade little or no raw materials among themselves,” IMF experts emphasized, according to whom “geopolitical fragmentation threatens to disrupt traditional supply chains and lead to rising prices not only for strategic raw materials, but also for key agricultural products.”
The study, in which researchers analyzed a wealth of statistics compiled by the US and British Geological Surveys, the Food and Agriculture Organization of the United Nations (FAO), and the International Energy Agency (IEA), provides an unprecedented database of global commodity production and trade.
The IMF cannot help but be concerned regarding the concentration of many industries in a few countries. For example, global tungsten production is currently concentrated in China (85% of total production), Vietnam (5%), and Russia (3%). Rare-earth elements production is again located in China (70%), Myanmar (11%), and Australia (8%), while palm oil production is concentrated in Indonesia (60%), Malaysia (25%), and Thailand (4%).
Russia is one of the world’s three largest producers of approximately ten types of raw materials: tungsten (3%), antimony (16%), silicon (7%), magnesium (9%), nickel (9%), potassium (17%), sunflower seeds (27%), natural gas (18%), oil (12%), and wheat (10%).
However, IMF experts noted that the situation in 2023 could be slightly different from the picture presented in the report, since the analyzed data relates to 2019, a year before the Covid pandemic. The specialized study preceded the publication of a new fundamental IMF report entitled “World Economic Outlook,” due to be published on October 10, 2023.