IMF Managing Director Kristalina Georgieva warns against another Cold War

International Monetary Fund Managing Director, Kristalina Georgieva, warned of the risk of a new Cold War following efforts to ensure the security of supply chains amid geopolitical tensions between major world powers.

Earlier this month, the Fund warned that rising geopolitical tensions and the consequent fragmentation of the global economy were increasing risks to financial stability and global output.

"Fragmentation is the adherence to trade within allied countries at the expense of global exchange of goods and services. In the long run, fragmentation will cost us between 0.2 and 7 percent of World GDP," Georgieva said.

According to her, if we are not rational, the people, the middle class in each country will pay the price. On Wednesday, the G7 countries advocated for increased trade between close or allied countries to make them less dependent on rival countries at a systemic level. Kristalina Georgieva noted her life experience from her native Bulgaria.

“I am among those who know what are the consequences of a Cold War: it is loss of talent and contribution to the world,” Kristalina Georgieva said during a press conference at the official start of the World Bank and IMF’s spring meetings.

“Can we enhance security of supply without pushing the world into a new Cold War? I think that’s possible,” she said.