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Bloomberg Talks

Gita Gopinath Talks Middle East Conflict

Apr 19, 2024
IMF's No. 2 official, Gita Gopinath, discusses the potential impact of Middle East conflict on global oil prices. They explore inflation, trade fragmentation, and central bank targets in a fragmented world, proposing higher inflation rates for stability.
07:00

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Quick takeaways

  • Middle East conflict escalation may trigger global oil price spike.
  • Growing trade fragmentation requires diplomatic solutions for stable global economy.

Deep dives

Fragmentation of Global Trade and Its Inflation Implications

Underlying the seemingly stable ratio of global trade to GDP lies a growing trend of fragmentation. Trade between US and China-centric blocs has outpaced trade within geopolitically aligned firms, and foreign direct investment reflects a similar pattern. This shift, alongside the emergence of connector countries like Vietnam and Mexico, rerouting supply chains globally, may elevate the cost of goods, potentially leading to higher inflation in the future.

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