The world faces a risk of “fragmentation of the world economy into two blocks, with different systems for trade, technologies, payments and foreign exchange reserves”, according to Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF). She was speaking ahead of the spring meetings of the IMF and the World Bank, a series of economic meetings held in Washington from Tuesday, April 19.
The World Trade Organization (WTO) has also warned that the conflict in Ukraine could erase half of the growth in world trade expected in 2022, and in the long term lead to a “disintegration of the world economy into separate blocks” which would be organized according to geopolitical considerations.
→ MAINTENANCE. War in Ukraine: “The economic weapon will be decisive in the long term”
This fear of a decoupling of the global economy is currently on everyone’s mind. “History teaches us that dividing the world economy into rival blocs and turning our backs on the poorest countries leads neither to prosperity nor to peace”judged Ngozi Okonjo-Iweala, the leader of the WTO.
The end of happy globalization
At the end of March, Larry Fink, CEO of BlackRock, the world’s leading asset manager, mentioned the same risk in his letter to his shareholders: “Russia’s invasion of Ukraine puts an end to globalization as we have known it for the past thirty years”, he noticed.
Since then, we have seen Russian President Vladimir Putin call for “reorient exports” Russian gas and oil “to the markets in the South and East which are growing rapidly”.
→ REPORT. ‘The West has always hated us’: In Russia, sanctions boost Putin’s popularity
The political tension between East and West and the proliferation of economic sanctions affect world trade. This period of tension did not begin with the invasion of Ukraine, but with the trade war started by former US President Donald Trump against China. These sanctions, and then the pandemic, put a brake on world trade.
China, the EU’s largest trading partner
However, they have not sounded the end of globalization, believes Françoise Nicolas, director of the Asia center at Ifri, the French Institute for International Relations: “ There is a disconnect between rhetoric and economic reality. Despite the tensions, many countries remain very economically linked to China.she judges.
For the European Union, China has become the leading trading partner: imports of goods “made in China » increased by 30% since 2019, reaching 472 billion euros last year. The rapid resumption of world trade in 2021 could even plead for a strengthening of economic ties.
“There is no economic decoupling to date, also explains Vincent Vicard, head of international trade analysis at Cepii, Center for Prospective Studies and International Information. This does not prevent very strong tensions. The European Union has changed its vision of globalization by considering China as “a systemic rival” since 2019. This trade policy, which takes geopolitical reality more into account, is still in the making. »
Trade does not make economic systems converge
Trade remains important. But they are leveling off: in 2019, according to the World Bank, 28% of global GDP came from exports. This is three points less than in 2008. And above all, no one now believes that they favor a convergence of economic systems.
“The level of integration of economies is no longer increasing”analyzes researcher François Polet at the tricontinental center (Cetri), which studies North-South relations and the challenges of globalization. “There is a very clear difference with the twenty years preceding the 2008 crisis. At that time, world trade grew twice as fast as world GDP. Since then, relatively, it has not evolved any more”, explains the researcher.
François Polet notes a refocusing of economic agreements. “Multilateralism is undermined by geopolitical rivalries. We can expect a strengthening of the logic of regional integration”, he explains. The free trade agreement signed in 2020 by fifteen countries in the Indo-Pacific zone, including China, Australia, Japan and Indonesia, is part of this recomposition.
The dollar remains king, for now
Despite this decline, developed countries still dominate the currency market. A good indicator: foreign exchange reserves. “The major currencies, the dollar, the euro and the pound remain the main investment currencies for central bank reserves: they are very liquid and very safe”, we explain on the side of Bercy, upstream of the IMF conference.
→ ANALYSIS. War in Ukraine: these big countries that do not apply sanctions against Russia
“It remains to be seen whether the sanctions on the foreign exchange reserves of the Russian Central Bank create a precedent. What will be the impact for countries that are on the margins of the international system? emphasizes Vincent Vicard. Progress will need to be monitored. »
Global growth below 3% in 2022
According to the World Trade Organization, global GDP is expected to grow by 2.8% in 2022, after increasing by 5.7% in 2021, due to the war in Ukraine and the consequences of Covid. The activity was already experiencing a slowdown before the outbreak of the Russian invasion, specifies the WTO.
World merchandise trade volume expected to grow by 3% in 2022while the WTO was counting on an increase of 4.7% in October, but these figures could be revised depending on the evolution of the conflict.